Should Your Small Business Offer More Than One Plan Type?

Small Business

Should Your Small Business Offer More Than One Plan Type?

Updated on November 29, 2019

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Wondering if your small business should offer more than one plan type for group health insurance? While all companies have unique medical needs and different employee coverage preferences, a majority of small businesses who offer health coverage decide to offer only one type of group health plan. However, a small business can still choose to offer more than one plan option to its workforce.

Continue reading to find out factors to consider when deciding on how many plan types you could offer.

How many small businesses offer multiple health insurance plan types?

According to a Kaiser Family Foundation report, 83 percent of small firms (with between 3-199 workers) offer one plan type, 15 percent offer two types of plans, and 2 percent offer three or more plan types.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2017

How does a small business decide what number of plan types to offer?

Although a small business with less than 50 full-time equivalent employees is not required to offer group health insurance coverage to its workers, a small business owner can still decide to offer at least one health plan option to his or her employees. Depending on their preferences, small employers might also consider offering more than one group plan type to their workers.

Here are a few key factors to keep in mind when deciding how many plan types to offer:

  • The ages and medical needs of your workforce – Some employees might prefer not having to see a primary care physician (PCP) for specialist referrals, so they might find a PPO plan to be convenient. Younger and relatively healthy employees who may not need to visit the doctor as often might prefer an HMO plan with low premiums, while older employers who need to see the doctor more frequently or get prescriptions might instead opt for a lower deductible plan.
  • Budget – Both affordability and flexibility tend to be a major considerations when choosing a small business health insurance plan. For instance, an HMO plan tends to have lower premiums than a PPO plan; however, a PPO plan typically provides greater flexibility in terms of obtaining medical services outside of your network. A POS plan generally requires a PCP (like an HMO) while also allowing a wider range of health care providers (like a PPO).
  • Location – If most of your employees live and work in the same geographical area, they might appreciate the convenience using nearby networks or local providers, and may benefit from the managed care system of an HMO plan or network-centric services of an EPO plan. Alternatively, if your workers commute throughout a larger, more spread-out region, they might find value in the network flexibility of a PPO or POS plan.

Knowing how much each plan type pays for covered medical services can help your small business decide what number of health insurance options would best serve the needs of your employees. When deciding on health coverage, be sure to talk with your group to find out what they want out of a plan.

What is the most popular small business health plan type?

According to an eHealth survey, almost half (47 percent) of small business owners chose to enroll in a POS plan in 2018, while POS and HMO plans accounted for nearly three quarters of all plans selected in 2018. The report also found that:

  • HMO plans accounted 26 percent of small business plans in 2018 (up from 24 percent in 2017).
  • PPO plans accounted for 15 percent of plans in 2018 (up from 12 percent in 2017).
  • EPO plans accounted for 12 percent of plans in 2018 (down from 14 percent in 2017).

Source: eHealth 2018 Small Business Health Insurance Report

Ultimately, some small businesses may find that one plan type is the most effective way to provide health insurance to all of their workers, while other businesses may decide that offering more than one type of health plan lets them better address the variety of medical services their employees require.

Where to shop for small business health insurance

You can find affordable group health insurance plans through eHealth. As one of the largest private health exchanges for small business, we make shopping for group health insurance simple and easy. You can conveniently compare plan types from multiple insurance companies all in one place though our website, and can get unbiased expert advice from our licensed health insurance agents. Visit eHealth.com today to learn more about finding the right health insurance for your small business.

This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.

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