Small Business Health Insurance in California
Published on April 26, 2018
Over two million people rely upon small business health insurance in California, according to the California Health Insurance Foundation, or CHIF. This figure represents about one person out of every seven who have health insurance in the state. In this way, group health insurance for small businesses has a vital place in the economy.
CHIF defines small business health insurance in California as plans that cover no more than 50 employees. While companies this small may not legally have to offer group medical insurance, they may find that health plans help keep and attract good employees. Small business health insurance in California could help reduce turnover, lower recruitment costs, and of course, keep employees healthier and happier.
How does small business health in California work?
Typically, employers and employees share the cost of premiums—the monthly cost that is paid in order to remain on a health insurance plan. Employers that contribute at least half of their plan’s premiums may qualify for tax credits from the government for providing group health insurance for small businesses. Depending on the state and health insurance company, you may find that you’re required to contribute at least 50% of employees’ premiums if you do decide to offer group health insurance, so make sure to check your plan details before purchasing.
Below are some of the most popular types of health insurance plans. You may decide to offer more than one type of plan in order to accommodate to different needs of employees. Either way, it’s important to know how each plan works.
- Health maintenance organizations: HMOs require their members to access virtually every covered service through the insurance company’s network of healthcare providers. They usually also require members to select a primary care physician and to get referrals for visits to medical specialists from that primary care doctor. Typically, these medical policies make exceptions to network rules only for emergencies and some other very rare situations. In return for more restrictive rules, this kind of small business health insurance in California may have lower premiums and copays than other kinds of health plans.
- Preferred provider organizations: A PPO will also have a healthcare provider network; however, members can still access healthcare outside of the plan’s provider network. Out-of-network healthcare will cost more to encourage plan members to rely upon the network most of the time. A PPO also won’t require their members to select a primary care doctor or to get a referral before visiting a specialist. In return for more flexible network rules, insurance companies may charge higher premiums.
- High-deductible health plans: A high deductible health plan has a minimum deductible of $1,350 for individuals and $2,700 for families, according to healthcare.gov. These work with health savings accounts, or HSAs. An HSA is a tax-advantaged account that can help pay for expenses before meeting the deductible. The HSA may also help cover some expenses that health insurance doesn’t pay for, like dental or vision services.
According to CHIF data, HMOs and HDHPs in California have lower average premiums than PPOs. Still, PPO plans remain popular because they offer more flexibility. Even with the same type of plan for the same population of employees, deductibles, copays, and benefits can also influence prices.
If you want to learn more about plan types, and get some tips on how to choose group health insurance for small businesses, read this eHealth article.
How to find the best value for small business health insurance in California
The amount that a small business will pay towards premiums depends upon:
- The employee population: The average age of employees will impact premiums.
- The employer contribution percentage: For instance, employees may offer to cover employee’s families, but they may not offer to pay the same portion of the premium.
- The type of group health insurance: Generally, more restrictive plans will cost less.
- The insurance company: Insurance companies set their own rates, so it’s important to shop around.
Californian business owners who plan to offer health insurance can benefit both themselves and their employees by shopping for the best value. As with any other type of insurance, it’s important to weigh costs, benefits, and preferences to make the right choice. For instance, plans with higher premiums generally should reduce out-of-pocket medical bills and offer more choices. On the other hand, workers with lower incomes may prefer low-cost plans.
Get started by searching for small business health insurance in California here on eHealth. You won’t . This is also a good place to research other benefits, like group dental or vision plans. Employers can find the right tools on eHealth to keep their employees and their budgets healthy.