Small Business Health Insurance

Small Business Health Insurance

In this article on small business health insurance, we examine the health insurance options and terms you will encounter when shopping for insurance.

Before we discuss the health insurance options for your small business, let’s answer this question:

Why even have health insurance?

If you are a sole proprietor or operate a small business, it is essential that everyone involved in the business have as much “up time” as possible.  Your employees may need to serve multiple functions to ensure your business operates effectively.  With cost-effective health insurance, you and your employees can take advantage of necessary medical services when you need them, so you can keep your small business operating smoothly.

Further, you may even be able to attract and retain better employees when you offer health insurance coverage as a benefit.

When you and your employees belong to a health insurance network, you can avail yourself of the services of numerous health professionals.  It may be comforting to know that if and when you need medical help, someone in the network will be available to provide the necessary services.  Further, to help you avoid costly medical procedures, preventive care may be offered to you and your employees at little or no cost through the health plan that you choose.

Not only might you be able to obtain discounts on preventive care, but other medical services may be available at reasonable rates through your medical plan.  Health insurance companies negotiate with health insurance providers who can help protect you from the costs of certain medical procedures that, without coverage, could potentially bankrupt you, your business or your employees.

Health Insurance Options

The current health care laws do not require an employer to pay 100% of the cost of health care, in fact some plans and states require no employer contributions at all!

If you’re self-employed with no employees, you can get coverage through HealthCare.gov’s individual market, called Health Insurance Marketplace.

If you have between 2 and 25 employees, you may qualify for tax credits if you buy health insurance through the Small Business Health Options Program (SHOP) Marketplace.  For 2014, the SHOP Marketplace is open to employers with up to 50 full-time-equivalent employees (FTEs).

You may also qualify for a small business health care tax credit worth up to 50% of your premium costs.  You can deduct from your business taxes the remainder of your premium costs not covered by the tax credit. Beginning in 2014, the tax credit is available only for plans purchased through SHOP.

With the SHOP Marketplace

You control the coverage you offer and how much you pay toward employee premiums.

You can choose from 4 levels of coverage to find a plan that meets the needs of your business and employees.

You can start coverage any time. Enroll by the 15th of the month and coverage can begin on the 1st of the following month.

To use the SHOP Marketplace, you must offer coverage to all of your full-time employees.  A full-time employee is generally anyone working 30 or more hours per week on average.

Each state has its own SHOP Marketplace. You must have an office or employee work site within the SHOP’s service area to take advantage that particular SHOP.

In many states, at least 70% of your full-time employees must enroll in your SHOP plan. (Employers who apply for SHOP coverage between November 15 and December 15 of each year can enroll without meeting this requirement.)

Health Insurance Terms

Let’s say that you injured your arm while playing racquetball.  You visit one of the doctors in your health insurance network.  Let’s discuss five terms that the doctor’s office manager may use with you:

“Your copayment today is $25.” – This means that you are responsible for $25 of the total charge for the doctor visit.  You realize that it has been many decades since you could avail yourself of the services of a physician for a mere $25.  (Maybe this was back in the day when doctors made house calls.)  But don’t worry about your doctor.  Your health insurance plan will pay the balance of the fee.

“Your annual deductible is $2,500.” –  This means that you will pay the first $2,500 in medical expenses out of your own pocket before your health insurance will kick in.

“I see that your monthly premium is $500.” – This is the fee you pay every month for health insurance coverage.  Remember that medical plans with a lower deductible generally have higher monthly premiums.

“Your coinsurance is $500.” – Even after your health insurance takes effect, and after you have met your annual deductible, your health insurance may still not pay every cent of your health care expenses.  For example, if your insurance covers 70% of an MRI, you may be responsible for the other 30% even if you have met your annual deductible.

At this point you may be asking yourself, “But what good is health insurance?  I may need to make a copayment, then I need to reach an annual deductible.  And even when I do, I may still be responsible for coinsurance!”

Here is where the real peace of mind with health insurance comes in . . .

“Your maximum out-of-pocket costs are $5,000.” – So you’ve paid your copayments, deductibles and coinsurance.  Isn’t it comforting to know that, because of the health insurance coverage you have, in any one year, the most you will pay for medical care are your “maximum out-of-pocket costs”?  You realize, of course, that even a short stay in the hospital could run up charges in the tens of thousands or even hundreds of thousands of dollars.  (Hopefully, in this case, your twisted arm won’t land you in a hospital bed!)

The peace of mind of having a maximum on your out-of-pocket costs may be the biggest benefit that comes with health insurance coverage!

Trusted Health Insurance Advice

We have attempted to simplify health insurance here, but you will find that once you start to research possibilities for coverage, you will find an often-confusing myriad of options and terms.

You may then find yourself asking, “Which will work best for me and my employees, a plan with . . .

  • A low monthly payment but a high annual deductible?
  • A high monthly payment but a low annual deductible?
  • A small copayment that takes effect even before I reach my annual deductible?

You may also ask yourself, “How high or low should I set my annual maximum out-of-pocket costs?”

As you know, there is nothing more important in your life than your health.  Be sure to protect it, but also be sure to get advice from your trusted independent insurance agent.

He or she not only can help you with the right answers to your questions, but your independent insurance agent has a wide variety of insurance companies and programs to choose from to help you make the right choice and to save you money on health insurance premiums for your small business.

Health insurance laws are constantly changing, but your independent insurance agent can help you stay abreast of the changes.  Because he or she is also a local agent, he or she understands your local regulations and can help you stay in compliance.

Top ten ways to save money on health insurance >

While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.