Group Health Insurance for Small Business: Five Questions Every Small Business Owner Should Ask
Published on December 07, 2016
There are a lot of things to consider when choosing a health insurance plan for your small business. It’s never easy to find the perfect group health insurance plan for everyone’s needs and budget. However, there are five questions all small business owners should ask when shopping for a new health insurance plan.
1. Who will be covered under this group health insurance plan?
As a small business owner, the first thing you need to know is who will be covered under your new group health insurance plan. You probably intend to cover yourself and your family. You probably also intend to cover your employees – but which ones? If you have full-time as well as part-time workers, you are not always obliged to offer coverage to employees in both categories, but if you offer it to one employee in one category, you generally must offer it to all employees within the same category. Will you also extend coverage to your employees’ dependents? Most employers do, but it may not be required.
You may also wish to consider the likely health needs of your employees. Are they likely to need generous prescription drug coverage or maternity coverage? Are they likely or unlikely to visit the doctor often? For legal and privacy reasons, you may not be able to ask them specifically about their personal health, but you can usually ask them in general terms what kinds of health coverage are most important to them.
2. How much can I afford to contribute toward monthly premiums for a group health insurance plan?
With group health insurance plans, the employer is required to make contributions toward the premiums of his or her employees. Generally speaking, employers are required to pay the health insurance company at least 50% of the monthly premiums for each employee, while the employee contributes the remainder from his or her pay. Typically, there are fewer rules about how much you should contribute toward the health insurance premiums of your employees’ dependent spouses or children, but be aware of the burdens they may face when it comes to covering their families under your new plan.
As a small business owner, making contributions towards the premium of your employees may seem expensive. However, when you consider the cost of supplying coverage to your employees, remember that your contributions toward their monthly premiums are generally deductible from your business taxes. Work with a licensed tax professional to better understand what the tax deductibility of employee health insurance premiums may mean for you.
3. Would you and your employees rather pay more up-front and less when sick, or vice versa?
There are two main categories of costs associated with any health insurance plan. First, there’s the monthly premium that must be paid to maintain coverage. Second, there are “cost-sharing” expenses which only come into play when you actually receive covered medical care. Cost-sharing can take the form of copayments, deductibles and coinsurance. Health insurance plans with lower monthly premiums tend to come with higher copayments and deductibles and coinsurance, while plans with higher monthly premiums tend to come with lower copayments, deductibles and coinsurance.
If you rarely visit the doctor and don’t use prescription drugs on a regular basis, a plan with a lower monthly premium and higher cost-sharing may make sense for you, so long as you can afford to pay your deductible in an emergency. On the other hand, if you take prescription drugs on a regular basis or visit the doctor frequently for a chronic condition, you might be better off with a plan that that has higher monthly premiums but lower copayments, deductibles and coinsurance.
4. Can I afford to bundle vision or dental care when purchasing a group health insurance plan?
When shopping for a group health insurance plan, you may also want to consider dental insurance or vision insurance. These insurance products are generally purchased separately, but you may be able to purchase them at the same time, or to purchase them as “riders” or add-ons to your group health insurance plan.
When you add vision and dental insurance to your group health insurance plan, you’re offering your employees a valuable total benefits package. Some employers feel that offering a strong benefits package helps them hire and retain the best workers.
5. What group health insurance coverage options can my licensed health insurance agent recommend?
When shopping for a group health insurance plan, it’s a good idea to work with a licensed health insurance agent or a licensed online marketplace. A licensed agent or marketplace can show you coverage options from different insurance companies in your area and answer your questions about the coverage offered under each. Licensed agents can provide you with the personal help and advice you need to make an informed decision, and it never costs anything extra to work with an agent.
What’s more, when you’ve picked a plan, your licensed agent can help you enroll your employees in coverage. And when your annual enrollment period comes around each year, your agent can help you review new coverage options in your area to make sure you still have the best plan for your personal needs and budget.