Up to 60% of Americans receive their health care coverage from an employer-sponsored coverage plan. In surveys, many employees will tell you that the most important thing about their job is their employer-sponsored health insurance plans. If you, as a small business owner, really care about your employees, workplace satisfaction, and, ultimately, customer satisfaction then you will sponsor some sort of health care benefits. It is important on many different levels but, most importantly, it will set up a healthy reciprocal relationship with your employees; a strong trust. Now, the challenge is to find the most affordable care that does the most for your valuable employees.
Benefits of Small Business Health Insurance Quotes for the Employee
The benefits to the employee are obvious – you and your business are contributing to the cost of health care for the employee and, perhaps, their family. This reduced cost is a form of insurance for the employee and makes their life a little easier. No longer do they have to worry about the financial liability of falling ill or getting injured. They are covered and won’t lose their shirt, so to speak.
This feeling comes at a premium and, as stated earlier, is one of the most important reasons for choosing employment. This feeling promotes a feeling of well-being at the workplace. It has been proven that productivity in the workplace goes up because of a common sense of well-being; everyone will believe they are on the same team. Small business health insurance is a good thing to do – for business and for people.
Benefits of Small Business Health Insurance Quotes for the Employer
You get to attract top-of-line employees and that is important in this day and age. Your small business will struggle to survive without the best employees available. Many employees seek employment for the health insurance alone and many more will stay with an employer solely because of the benefits. Consider it a part of their pay. You can attract the best employees, offer a slightly lower wage and comprehensive health insurance in order to save money and promote happiness. Workplace satisfaction will rise and so will productivity. This all spills out into the real world and translates into more satisfied customers. When employees are happy they will treat customers with more grace and care. The employee will feel invested in the company and go out of their way in order to promote the business. Essentially, group health care coverage will create a team atmosphere at your small business and that chemistry is hard to beat.
Two Major Styles of Coverage for Small Business
There are two main styles of health care coverage that are offered to you as a small business owner. There are the individual and family plans or there is the group plan.
The individual and family plan covers just the individual and family. This is a difficult way to cover employees in a work setting, but it could be pulled off if you have an extremely small business – less than five employees. This could be a good option for those who are self-employed as well.
A small business is more likely to utilize a group and/or small business health insurance plan. This is where the health care costs of the employee are shared between the employee and the business. Some states allow self-employed individuals to qualify for this type of coverage. The benefit is in the pooled risk and tax subsidies that will be discussed at length later in the article.
Four Major Types of Health Care Plans
There is a difference between coverage and plans. Coverage is the manner in which you choose to be covered while the plans are the specific ways in which you will carry out that coverage. There are four main types of health care plans available to a small business and each has its own benefits and detractions. It is up to you to find the best style of health insurance for you, your employees and your business.
PPO stands for “Preferred Provider Organization.” This is the most popular type of insurance for individual or family style insurance. With this type of insurance you will have to get your health care needs taken care of by a list of preferred providers. The doctors and hospitals you use will be limited. If you use a provider that is not on the list then you will not receive the full benefits of the plan or they may not be covered at all. Sit down and talk with your employees to see if they already use doctors on the PPO list and if they enjoy their current doctor. This type of plan is great for people who already prefer their own provider, but it is essential that you find the right plan. Your preferred provider needs to be on the list.
HMO stands for “Health Maintenance Organization” and is another network of health care providers. Again, you will need to stay within a list of providers in order to get full coverage because services rendered outside of the network typically aren’t covered. With this type of insurance coverage you will most likely have to choose a primary care provider. This will be your main doctor who will check on you every so often. You will take your concerns to this particular doctor and you will be referred to specialists when needed. This type of coverage is good for when you want to promote a community feel as everyone will have “their” doctor – a health care specialist that they can form a professional relationship with.
These are much like the PPO plans described above, but are designed specifically for the implementation of health care savings accounts. Health care savings accounts are a cost-cutting way to deliver health insurance to your employees as a small business owner and is discussed at length later in this article. HAS-Eligible plans are high deductible in order to qualify you and your employees for a health care savings account. That means the employee is on the hook for a specific amount of health care per year before the plan kicks in and starts covering medical services. This plan is great if you have a small group of young and healthy employees; people who rarely, if ever, see doctors. There are also specific benefits in having a health care savings account that will be discussed later. This type of plan will save you, the small business owner, money, especially on taxes as health care savings accounts are tax free.
These types of plans tend to be the most expensive, but they offer the greatest flexibility. With an indemnity plan you can see any doctor you’d like or attend any hospital. You agree to pay a portion and then submit the rest of the cost to the insurance company for reimbursement. Sometimes you have to pay the whole thing up front or a portion of the entire bill before submitting for reimbursement. This plan is great because it offers the most flexibility and is the least confusing as you are covered across the board with all providers. The only drawback is that you have to do all the paperwork. When you receive your bill you must coordinate the reimbursement.
The size of your small business will affect the type of coverage you choose, the plan and the cost of the entire package. Generally, a company of two or more people can be covered by small business health insurance quotes and plans, but companies with more than 50 people will have to apply for a different type of coverage. Health insurance providers generally rank your business by its size into three separate categories: small, medium and large. Each state mandates different definitions for a small, medium or large employee pool. Usually, the more employees the cheaper the health care coverage will be, but if you have more than 50 employees you will have a difficult time finding small business coverage.
Rising Health Care Costs
One concern moving forward is the rising cost of health care. You may see a wave of employees looking for a job with health insurance benefits because of the rising cost of health care. Unfortunately, the cost of health care is skyrocketing and that will directly impact you as a small business owner.
In California, health insurance costs rose 10% in 2006 alone. That is a 10% jump in costs within one year. So, the market is volatile. Plus, a study done by the New York-based Commonwealth Fund found that small business spent 18% more per capita than large businesses. This juxtaposition does not seem fair, but it is most likely the result of faulty planning by the small business owner.
Large companies not only get to buy insurance plans at a “bulk rate” discount, but they can afford a human resources department that stays on top of the health insurance that the company buys. There is a fleet of employees that monitors the health insurance of the entire company from making sure employees use it correctly to ensuring the health care coverage they have is the most affordable on the market. If the human resources department finds a better deal, they will simply advise the company to switch plans and save money.
Unfortunately, most small business owners do not have the ability to hire personal just to take care of health insurance. That means you, as the small business owner, needs to stay on top of the trends in health care coverage and current small business health insurance quotes.. These trends vary state by state and can be confusing. You may not even have the time to keep on top of the affordability of your health insurance plan. It is not a lack of caring or effort, it is simply a lack of resources that explains the discrepancy in health insurance costs between small and big business. Although, there are a variety of things you can do to make sure you keep health insurance costs down.
Wellness Program and Preventative Care
Your insurance costs will go down if your employees aren’t getting sick. Motorola, a large company for sure, implemented a wellness and preventative care program that worked astoundingly well. The company offered wellness programs that tackled common afflictions such as asthma and diabetes. It also offered free flu shots in the office and cancer screenings. The company set up a telephone line staffed by medical professionals and it offered classes on how to stop smoking. Another large company, Pfizer, actually found that the majority of their employees participated in at least one of their wellness programs. The companies found that not only were their workers healthier, they were happier. Happier employees lead to successful business.
Implementing a wellness program for your small business might be a little trickier. Chances are that you don’t have the resources to have a hotline staffed by nurses or the ability to screen for cancer, but you are capable of more than you think if you reach out. Get this, Motorola eventually found that they saved $3.93 for every dollar they spent on the programs. They are effective. Plus, it adds to that all-important chemistry in the workplace. If your employers think you are taking care of them then they will take care of you.
Perhaps you can come up with a group rate at a local gym. Reach out to your nearest health care group to see if they can’t come in to implement flu shots for your employees and answer medically related questions. Emphasize healthy lunches and activity during breaks. There are a lot of wellness “programs” you can set up as a small business. All you need to do is create an environment that has a sense of wellness. That starts with you. Be proactive.
Implement Health Savings Accounts
Another way to reduce health care costs for your small business is to implement health savings accounts. This is a complex idea, but these accounts are tax free and can only be used for health care costs. Essentially, you are asking your employees to contribute to accounts that will help pay for their own health care costs down the road. An individual can contribute nearly $3,000 to this account every year tax free. Families can contribute nearly $6,000 and all of it is tax free.
There is a catch, however. You need to implement a high deductible health insurance plan for your employees. To qualify for health savings accounts the minimum deductible for an individual would be $1,100 and $2,200 for a family. That means that the employee would have to cover the first $1,100 or $2,200 respectively, ever year, before being reimbursed by the health insurance company. Now, they might not like that idea, but if your business is struggling to deal with the rising cost of health coverage in America then it may be your only choice. These high deductible plans are more affordable for you, the small business owner.
There are benefits to this type of coverage. The accounts are tax-free and do not expire. So, the employee can contribute their own salary into the accounts and store up a bunch of money to cover them in case of an emergency. Plus, the accounts can go with them. They do not have to stay with you at your small business and this flexibility may make this an attractive option for employees.
Here is a crazy idea – get together with other strong small businesses inside your community to receive the best health insurance quotes around. The bigger your business, or the more people in a group that are looking to get coverage, the lower the insurance costs. You can essentially turn David into Goliath if you find the right group to band together. A study done in 2006 found that the average group health insurance premium for a group of 10 or fewer employees was almost $100 more per month than a group of 26 to 50 employees. States determine the ability to do this, but if it is available you should look into it as a cost control option for your small business.
This is something your employees will definitely not want to hear. Nobody wants to be told that their health insurance coverage is going to be diminished, but it may be your only option. This will force workers to pay more out of pocket costs when it comes to their own health care, but you may want to comfort them with the idea that they are still covered for the big things. They won’t lose their entire life savings getting sick or injured.
One of the ways to effectively reduce benefits is to start by taking away or reducing dental coverage. The health insurance benefits are most important to employees so reducing dental coverage is a good way to start. Try not to hack into the health insurance coverage too much and investigate the health savings accounts listed above as an alternative.
This seems fairly obvious, but health insurance coverage is a product and America is a capitalist society. You do not have to keep any type of coverage that isn’t working for you and, if you find that another type of coverage from a competitor is more affordable don’t be afraid to drop your current insurance quickly. It is an open market and it is your right to choose. Don’t let anyone fool you otherwise. Additionally, you can compare your small business health insurance quotes year round. You don’t need to wait until your annual open enrollment period.
Remember, you do not have the manpower to keep on top of trends in health insurance, so it is very important to shop around. It is essential that you collect as many health insurance quotes as you can when you are looking for small business health insurance quotes. Then, after having purchased insurance, you can use a simple small business health insurance quote search engine on the internet to check current rates. If you find a better rate, at any time, drop your current insurance and go with the new one.
Collecting Small Business Health Insurance Quotes
Small business health insurance is regulated by the states and each state has different policies. This will continue as Obamacare is phased in. Availability, affordability, and eligibility will vary from state to state, but the new federal law will mandate certain requirements down to the states. You can bank on a certain level of treatment from each state.
Just because you must qualify for certain types of small business health insurance plans doesn’t mean you cannot get quotes. You can collect as many quotes as possible then, after having chosen the plan that is right for you and your small business, you can proceed with the qualification process.
Collecting quotes is easy. You can simply go online and use a small business health insurance quote search engine. Just provide some information about your company and click through. You should be given state-specific health insurance quotes for a small business like your own. This will give you a great ballpark to work with. You will understand the costs associated with giving your small business’s employees health coverage in your state.
Small business health insurance quotes are just the beginning. You may want someone to assist you in the search for the right type of comprehensive plan. The insurance world can be daunting. There is a lot to know about the current state of health insurance and a lot to know about Obamacare going forward. It may benefit you to contact a qualified health insurance broker.
Benefits of an Insurance Broker
We’ve already discussed how small businesses may not be able to hire people to stay on top of current health insurance issues. That coverage is found and implemented by the owner of the business or another employee who may or may not be specialized in the small business health insurance. That is why it may be a good idea to hire what is called a health insurance broker to compare your small business health insurance quotes.
These brokers will work for you to find the best, most affordable and most comprehensive health care package for your small business. They will not only be able to rustle up incredibly accurate quotes but they will be able to walk you through the entire process. Essentially, they are a large business’s human resources department for hire.
A broker can stay on top of the trends and can revisit your health insurance policy every so often. They can shop around for bigger and better deals. When one is found they will walk you through the process of phasing out the old insurance and bringing on the new insurance. Most importantly, they will know the benefits and detractions stemming from the upcoming federally mandated changes to health insurance coverage.
A broker is a good way to keep your employees happy. They will find the best coverage for your situation because they have comprehensive knowledge and pertinent experience. Your employees will be happy that you have found them the best insurance possible and you will be happy with the money it will save you.
Insurance is essentially pooled risk. An individual has a lot to risk out in the world. If the individual gets sick or injured then who they can turn to? They will have to pay for the illness or injury out of their own pocket. Essentially, there is a lot of risk being an individual. But, when you join others at a company and pool your risks, the risks decrease. Everyone is paying into an insurance policy and that money will go to whoever might fall ill or get injured. By paying a little bit into a system you get to reduce your risk.
The system is a bit flawed, however. Companies are groups of individuals that do not share a common amount of health. They are a team of individuals that each has a skill set that is essential to the operation of a business. This does not guarantee that one individual will be as healthy as another individual. This means the risk is not evenly distributed because you will have healthy employees that rarely see doctors and other employees with chronic conditions that rely on medical care.
Small business, especially new small business, is a bad gamble for insurance companies. The smaller the pool of people the higher the financial gamble. There is less money being pumped into the system on the front end and that means there will be less money on the back end when someone gets sick or injured. That is why premiums are higher for small business rather than big business.
Now we have Obamacare in the pipeline. This federal law will make sweeping changes that will most certainly benefit small business in many ways. One of the first ways it benefits small business is that nobody can be barred from health insurance for pre-existing conditions. This essentially levels the playing field in the pooled risk category. It forces the health insurance companies to look past the average health status of your employees. Essentially, a health insurance company cannot discriminate against the back end health cost risk of a small business. This should open up the market for you and your small business and help to control premiums.
Small business is about to see a boon in tax subsidies from the federal government with the implementation of Obamacare. These subsidies are an incentive for small business to offer health insurance to their employees and, with a little know-how, you can reap the benefits. Of course, it starts with you offering health insurance to your employees. The tax subsidies will not be offered to those small businesses who do not offer health insurance to their employees.
If you are a small business that offers health insurance to an employee pool of 25 or less and the average income for those employees is less than $50,000 per year then you are entitled to a tax subsidy equal to 35% of your health insurance costs. This reduces the cost to the employer and lets the small business buy better health insurance. In 2014, when the next phase of Obamacare kicks in, these subsidies will rise to an astounding 50% of health care costs.
Whether you agree with it or not, Obamacare is coming. It is the largest piece of redistribution legislation in modern history and much of the law benefits small businesses of less than 50 people while major tax subsidies are given to small businesses with less than 25 people. While the law does not require small businesses with less than 50 people to buy into insurance for their employees, it certainly encourages them to. You need to buy health insurance for your small company to reap the benefits.
Getting health insurance for your small business is a no-brainer. Not only does it show your employees that you care, but it also raises productivity and customer satisfaction by proxy. You get to feel good keeping your pool of employees healthy. Health insurance is a convoluted world that is designed to confuse you but has no fear, tackle it head-on, get solid quotes and seek the help of a professional broker. They can navigate you through the coming implementation of Obamacare and can help you achieve those tax subsidies that will help your business thrive.
iHealthBrokers is your small business health insurance quotes expert. Give us a call at (866) 260-9829.
Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.