Small Business health care plans are a specific type of group Health Care Coverage or Health Insurance plan that has been negotiated between the employer and a health care coverage provider or health care Insurance carrier. While small businesses are not currently required to provide health care plans to their full time employees and families, doing so is generally considered a good business practice. The precise definition of small business varies from Health Care Plan provider to provider, but it typically refers to companies with anywhere from two to 50 full-time employees.

Who qualifies for a Small Group Health Care Plan?

In most states, any legitimate business that has between 2 and 50 full-time employees.  The important word in the above sentence is "legitimate".  In this sense, it means a real business with licenses, financial, and payroll (W-2) records, bank accounts, and etc.  Many Health Care Coverage Providers and insurance carriers also require a certain minimum period of time the business must have been in operation.  In other words, if you are looking into obtaining a small group plan because you or a Family member has been denied a plan, then you would benefit most by contacting a Licensed Certified Field Broker/Agent ( Click Here) who can help you re-evaluate the options available to you.      

Benefits of Small Business Health Care Plans

Perhaps the biggest benefit of a small business group plan is that all company employees will be eligible to receive health insurance. Small group health care plans are offered on a guaranteed-issue basis.  Medical underwriting is not used to determine whether a small firm will be offered coverage. Small group premiums are determined by state rating rules, which set the degree of required "rate compression" based on the demographic and actuarial characteristics of the group, as well as actual or predicted health status. While the health status of the employees or dependents cannot be used to determine whether the particular health care plan is issued, it can be used to set rates in most states. The company is typically required to pay at a least a portion of the premiums. The plans selected for employees may also be extended to the employee’s families, but the company is not required to pay a percentage of the family members' premiums.

Small group health care plan premiums are often more expensive than an equivalent Individual/family plan due to the fact than no fulltime employee can be denied being included in the plan. The health care coverage providers and insurance carriers assume and calculate into the Premium a margin to offset the possibility that a future employee or the employee's family member may have medical issues and the health care plan provider must guarantee them to be added to the employer's small group plan. 

Small group plans may or may not be more comprehensive than an individual/family plan because what the plan actually covers depends upon what the employer decides to spend. Small businesses today often find it a struggle to remain viable thus the budget for health care plans becomes a visible target as a place to save on expenses. Most small employer group plans today are Contributory and require the employee to pay a portion of the premium and thereby shift some of the financial burden from the employer to the employee. From an employee’s perspective a Noncontributory type small employer group plan is best because the employer must pay 100% of the cost and cover 100% of the employees. There are tax advantages for both the employer and employees which help to defray the cost. Any employer’s contributions towards health insurance may be 100 percent Deductible. The money that employees contribute toward their own health insurance is paid for out of pre tax dollars, lowering their amount of taxable income. Furthermore, offering group health insurance can help a small business attract better qualified employees in some industries and markets.

It is advisable to consult with a Licensed Certified Field Broker/Agent ( Click Here) to make sure you have someone qualified to help you balance all of the factors. Once a company takes on a group policy for its employees it is difficult to reverse it.

What types of small business health care plans are available to me?

Any “rules” you may have heard from associates or other acquaintances about which types of plans are the least or most expensive or “best” to get are likely to be more inaccurate than helpful. All types of health care plans are available, but not all available health care plans are likely to be well received by the employees while remaining within the allotted company health care coverage budget.  The modest time you spend on this site seeking a better understanding of the implications embedded in each plan type will be well worth the effort.

The choices for a small employer group plan are essentially the same as for an individual/family plan. The standard type of group plans available are: Indemnity, PPO, POS, and HMO. However, an employer has some additional elements to help manage the cost of providing a health care plan to their employees. You should become familiar with the concepts of such tax advantaged programs as Flexible Spending Account (FSA) and Health savings account (HSA). However, jumping into these details before getting a firm grasp on how all types of health care coverage and insurance is governed by the three C’s of Cost, Coverage, and Control is like trying to assemble a puzzle without seeing a picture of the finished product. For a quick overview of the three Cs, Cost, Coverage and Control (Click Here ).

Any small business owner or executive would be wise to engage a Licensed Certified Field Broker/Agent ( Click Here) who is well versed in the small business group options available in their local market and who also understands the budget implications and value of the coverage an employer provides. In other words, it is one thing for an employer to say “we provide a health care plan” and perhaps quite another to provide a plan that is valued by the employees as well. Most small businesses do not have a dedicated human resources staff that is skilled in employee benefits and associated state and federal legal implications.

Generally speaking, while it is usually a good idea to provide some coverage for employees, the plan should at least meet certain minimum coverage amounts or the employees may feel cheated even though it may not cost them anything. In other cases, the small business group plan will be selected by the employer, but the employer may require the employee to pay for 100% of the cost. In any case, there is more to the process of a company deciding to invest in a group plan than meets the eye and a local licensed broker/agent can help clear the fog and streamline the process.

What are purchasing groups?

In some states small businesses can also join together to form a pool which then acts as a purchasing group for health insurance. There are many types of pools or alliances, some of which can be statewide. Information about these pools is often available from your Chamber of Commerce or your state insurance commissioner. It depends on which state in which you live, as to whether these alliances will work for you. Again, contact a Licensed Certified Field Broker/Agent ( Click Here) who can advise you whether you can possibly benefit from such an arrangement.

How can I lower the cost of my small business health care coverage or health insurance plan?

The most popular plan being promted by health care coverage and health care insurance companies are HSA / HIA compliant plans.  The larger deductibles associated with such plans results in a klower premium because these plans require the member to pay more Out-of-Pocket.  The negative aspect of this can be partially offset by the incorporation of the tax advantaged health savings account used to pay the out-of-pocket expenses.  You may want to refer to the FSA/HSA/HRA section (click here) and also consult with a Licensed Certified Field Broker/Agent ( Click Here) who is qualified to help you and your employees understand the pros and cons of these plans.  

To lower the cost of any health care plan a greater amount of the actual cost of delivering the care will be shifted to the employee (lower premium will result in less being). This topic is summarized for you in [See PTPC]. Most experienced small businesses will quickly attest to just how dicey it can be to suggest to the employees that you must switch to a plan that covers less even if you cannot afford it!

For the small business owner looking for health care coverage or a health care insurance plan, the main points to consider are:

• Most small businesses provide health insurance through a group plan.
• Make sure you appreciate the Cost, Coverage, and Control (click here) of health care plans and how they are affected by the type of plan you choose.
• You should understand the various types of networks used in group health policies (Indemnity, PPO, POS, and HMO).
• Don’t overlook the Self-Directed Health Plan tax advantaged options that are available to you (FSA, HSA, and etc.).
• It is wise to utilize the services of a local licensed broker/agent to answer your questions and help you create a plan that your budget can tolerate and is appreciated by the employees (see Licensed Certified Field Broker/Agent ( Click Here) in your area).
• The amount of the deductible (which you choose when setting up the plan) greatly affects what you will pay for the premium.
• Your decision about which type of group health insurance will probably come down to a compromise, considering your total costs for the policy, the services provided, and the ability of your employees to pay out-of-pocket expenses.
• Some states allow small businesses to form alliances which then purchase Group insurance at a savings.

Insight:

To make the quote process faster and easier, you'll need to have the following information on hand:

• Zip code of your business
• Number of employees you want to enroll in the plan
• Date your company started
• Date you anticipate the coverage to begin
• List of employees and family members to be covered (dependents, including spouses and number of children)
• Home zip code of each employee
• Employee's date of birth (age)

A skilled agent can initiate the preliminary process for you, if you can provide a list of the employees indicating their ages, smoking status, and ages of any dependents to be covered.