Health insurance 101 for employers
The world of health insurance is complex. For small business owners, health insurance for their employees can be a big investment – but it’s a worthwhile one.
Learn everything you need to know to feel confident when comparing employer health insurance options.
Protecting your small business
Health insurance helps small business owners in these ways:
1. Health insurance protects your finances
- Discounted rates: Small group insurance plans give you discounted rates for medical care. This is because insurance companies negotiate rates with health care providers. Without coverage, the fee charged for a regular office visit and other medical services can be much higher.
- Protection against the unexpected: Health insurance can protect you from unexpected medical costs. Even if you need to pay certain costs out of pocket, coverage can protect you from bankruptcy in case of an injury or hospitalization.
2. Health insurance protects your health
Your health plan gives you access to quality care through a network of health care providers.
- Access to critical care: When you’re insured, you have better access to care for medical emergencies and chronic conditions.
- Access to preventive care: Preventive care is often offered at no cost to members. You can better take advantage of regular checkups and other preventive care services.
3. Health insurance can help protect your small business
- Protection against the unexpected: Unexpected personal medical expenses can be costly. Health insurance can help keep your business operating by limiting your personal liability for these costs.
- Hiring and retention: Health insurance can help you hire and retain the best workers. Employer-sponsored group health insurance coverage can be an attractive benefit to prospective employees.
The difference between individual and employer-sponsored plans
There are two primary categories of health insurance for small business owners. These are individual or employer-sponsored health insurance.
Almost everyone can apply for individual or family insurance. Depending on how many employees you have and your state’s regulations, you may be able to offer employer-sponsored coverage.
These are health insurance plans purchased by individuals to cover themselves or their families. Almost anyone can purchase an individual health insurance plan. It’s no longer possible to be denied coverage based on your medical history.
You generally need to enroll during the annual open enrollment period, which runs from Nov. 1 through Dec. 15 for a Jan. 1 effective date. Outside of open enrollment, you may only be able to enroll after you’ve experienced a qualifying life event. These events include marriage, divorce, the birth or adoption of a child, loss of coverage or moving to a new coverage area.
Federal assistance can help qualifying individuals with monthly premium assistance and cost-sharing benefits.
Group health insurance plans (small employers)
This is employer-sponsored health coverage, also known as small business plans or group health insurance. Costs are typically shared between the employer and the employee, and coverage may also be extended to spouses and dependents.
Health plan types to know
Whether you’re looking at individual or group health insurance, you have several options.
Some are designed to provide you with as many choices as possible when it comes to doctors and hospitals. Others are designed to keep costs in check by limiting you to a network of doctors and hospitals.
Which type is best for you will depend on how much convenience and protection you want and how much you are willing to spend. Here’s a brief review of four popular types of health insurance plans.
HMO vs. PPO
HMO stands for Health Maintenance Organization. HMO plans offer a wide range of health care services through a network of providers. These providers either contract with the HMO or agree to provide services to members.
Members of HMO plans will typically need to select a primary care physician (PCP). PCPs provide most of their health care and refer them to HMO specialists as needed. Health care services obtained outside of the HMO are typically not covered except in an emergency.
An HMO plan may be right for you if:
- You’re willing to play by the rules and coordinate your care through a primary care physician.
- You want to save every dollar possible. Many HMO plans typically have lower monthly premiums than comparable PPO plans.
PPO stands for Preferred Provider Organization. Members covered under a PPO plan need to receive care from doctors or hospitals on the insurance company’s list of preferred providers. Their claims will be paid at the highest level only if they use providers from that list.
It’s your responsibility to make sure that the health care providers you visit participate in the PPO. Services rendered by out-of-network providers may be paid at a lower level or may not be covered.
A PPO plan may be right for you if:
- Your doctor already participates in the network.
- You want some freedom to direct your own health care but don’t mind working within a list of preferred providers.
EPO stands for Exclusive Provider Organization. EPO plans are similar to PPO plans but may be somewhat more restrictive when it comes to your network of doctors and hospitals. EPO plans typically don’t provide coverage outside your network except in emergencies.
These plans are becoming more popular with health insurance shoppers. Health insurance companies are offering more of them as well. You’re generally not required to select a single primary care doctor with an EPO plan.
An EPO plan may be right for you if:
- You don’t mind getting your care through a specific network of doctors and medical providers.
- You prefer not to coordinate your medical care through a primary care doctor.
These plans are designed to use with Health Savings Accounts (HSAs). HSA-eligible plans are similar to a flexible spending account (FSA) or 401(k). They work like a special bank account that allows participants to save money on a pre-tax or tax-deductible basis to be used for future medical expenses.
Unlike FSAs, the money in an HSA rolls over every year and can also earn interest. By pairing an eligible plan with an HSA account, participants can save money on health care and earn a tax write-off.
An HSA-eligible plan may be right for you if:
- You would like to pay for health care expenses with pre-tax dollars (up to an annual limit).
- You’re relatively young and healthy and don’t often visit the doctor.
- You prefer a cheaper monthly premium even if it means having more cost-sharing in case of unexpected injury or illness.
To learn more, request an agent or get a quote.
If you’re ready to compare plans, download our coverage worksheet. You can also call us at (888) 236-1074 to talk to an expert and start setting up your plan.
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