Health insurance for small business owners and their employees is available in various forms, ranging from individual health insurance plans to group options. Each option has its pros and cons, so it is essential to understand what each offers before choosing which plan you want to purchase.
Choosing the right health insurance plan for your small business can be challenging. There are so many options to consider, from the number of employees to the cost of coverage. But there are also several ways you can save money on your premiums.
Individuals purchase individual health insurance plans to protect them against major medical expenses. Both healthy and unhealthy individuals can purchase these plans as they do not have to be related to any employer or organization. These plans are also known as non-group or individual-only health insurance plans.
Individual health insurance coverage is generally less expensive than group coverage because fewer people participate in the risk pooling process. Suppose a person gets sick or injured while covered under an individual health plan. They may need to pay out of pocket for any medical expenses not covered by their policy until their deductible amount has been met (which can vary based on state law).
Group health insurance plans are offered through employers, unions, government agencies, and other similar organizations that sponsor employee benefits packages for their employees. Participating employees pay the premiums.
Small business health insurance is a type of coverage designed to meet the needs of small businesses. Large companies or health insurance providers often offer these policies to help businesses save money on their premiums. An employee benefits specialist can help you find the best plan for your business. They will look at the number of employees in your company, their ages, and whether or not they have pre-existing conditions. The specialist will also make recommendations based on your budget and any other factors that may impact your decision. It works in the following ways:
This means that no matter who applies for coverage, it will be provided if approved by the insurer. This differs from individual policies where applicants must show proof of good health before being approved for coverage.
Employer contributions are not always paid in cash. Employers may offer contributions in salary reductions or other benefits such as reduced vacation time or flexible work schedules that allow employees to cover their premiums through pre-tax dollars. This is particularly helpful for employers with low-income workers who do not qualify for premium subsidies under the Affordable Care Act (ACA).
You’re not required by law to offer coverage if your business has fewer than 50 full-time equivalent employees (FTEs). But if you do offer coverage and meet specific other criteria, you might be eligible for tax credits or other incentives through the Small Business Health Options Program (SHOP).
The amount of your tax credit depends on how much your employees contribute to their health care premiums and how much they make relative to the federal poverty level (FPL). The FPL is based on household size and location; it increases as household size increases and decreases as income increases. The ACA requires each individual to pay a certain percentage of the premium for their coverage (about 80 percent of the total cost). If you have five employees, each employee will be required to pay about 20 percent of their premium.
You can shop for health insurance anytime. You can get an idea of what plans are available and how much they cost by visiting the Health Insurance Marketplace, but you don’t have to wait until open enrollment begins. You can purchase a plan outside of open enrollment if you qualify for a Special Enrollment Period.
It’s easy to compare and buy health insurance online. You can compare health plans side-by-side on HealthCare.gov or use a tool such as the one provided by CompareHealthPlans.com or eHealthInsurance.com to find out which plan best fits your needs and budget.
Before buying, you can get help from licensed agents who know all about small business health insurance plans. Licensed agents are specially trained to help consumers understand their options when choosing between different types of coverage for their employees or themselves — including whether it makes sense to pay more for better coverage or less for bare-bones protection in some cases. Agents also know how much each insurance company charges for premiums, deductibles, and other costs associated with each plan offered by that company