Small Businesses and Health Insurance

If you’re a small business owner with at least one full-time employee other than yourself, this portion of our guide is designed to help you understand your health insurance choices and find the right match for your personal needs and budget. While many of your choices will be the same as those faced by self-employed persons, small business owners often have special concerns and special opportunities. For example, did you know that the money you spend on health insurance for your employees may be tax-deductible?

As you read on, our guide will lead you through a four-step process designed to help you find the coverage you need, and to manage your policy effectively once you’ve purchased it.

This portion of our guide is primarily concerned with small business/group health insurance plans. If you are not able to purchase a plan that provides coverage to your employees, but only for yourself and your family, please refer to the portion of our guide directed primarily to self-employed persons.

Step One – Assessing your Small Business Needs

Selecting the best health insurance plan for yourself and your business means making an informed choice and knowing your own priorities, and those of your employees. Is cost your number one concern? What kind of coverage is most valuable to you and your employees? Consider the following questions and discuss some of them with your employees to help you gauge your overall needs.

Four questions to help you assess your needs:

  1. Who will be covered under this plan?

    Why it matters: If you’re looking for a plan that will cover yourself and your family as well as employees and their dependents, then you want to make sure you find a group plan with coverage that is affordable for everyone involved and suits the diverse medical and financial needs of those it will cover. See if any of your employees are interested in joining your plan – they may already have coverage through spouses or other family members. In many cases, there will be a requirement that a minimum number or percentage of employees participate in a plan.

  2. How much cost-sharing can you afford?

    Why it matters: Group health insurance is employer-sponsored coverage, but monthly premiums are typically paid for by both the employer and employees. In most states, employers are generally required to cover at least 50% of the monthly premium for their employees. Keep this in mind when considering quotes for health plans later in the shopping process.

  3. Would employees rather pay more up front and less when sick, or vice versa?

    Why it matters: Discuss this question with your employees if you wish. Oftentimes, plans with less expensive monthly premiums come with higher annual deductibles and plans with lower deductibles often come with higher monthly premiums. If you and your employees don’t visit the doctor often, it may make sense to get a plan with a higher deductible (so long as the deductible is affordable in case of an emergency). It’s important to find a balance of monthly premium and deductible that works for as many people in your group as possible.

  4. What kinds of benefits are most important to you and your employees?

    Why it matters: This is another question it may be helpful to discuss with your employees. While federal privacy laws prevent you from asking your employees for information about their personal medical histories, you may still ask them about which kinds of benefits they consider most valuable. Are they more interested in catastrophic coverage in case of serious illness or hospitalization, or in low deductibles or copayment? How important are benefits covering vision care or dental care? Understanding the benefits most valued by your employees can help you find a plan more likely to meet everyone’s needs.

Though you are small, you are mighty. Shop plans for Small Businesses.

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