Navigating Health Insurance for Small Businesses: A Guide For Small Business Owners

For small businesses, navigating health insurance can often be a confusing and in-depth process. However, choosing to provide your employees and company with medical coverage could be one of the best decisions you can make as a small business owner for your employees and company.

It is your responsibility as the owner to understand and choose the right plan for your small business. This means you must familiarize yourself with the options available to small businesses and consider all the factors before you make your choice.

To learn more, this blog will help small business owners navigate health insurance better. You’ll understand the ins and outs of health insurance options and make better-informed decisions about providing group health insurance coverage for employees while simultaneously managing costs.

What Factors Should a Business Consider When Choosing a Health Insurance Plan for Employees?

As a small business owner, navigating group health insurance for small businesses can be challenging. With several insurance coverage options designed to meet the needs of varying businesses, you must know the factors influencing each coverage plan offering:

Provider networks for employees
Minimum participation requirements
Health coverage costs like monthly expenses
The total coverage level available to employees

In addition, a few of the insurance plan options available to small businesses that should be evaluated include the following:

Health reimbursement arrangements (HRAs)
Supplemental benefits such as health savings accounts (HSAs), flexible spending accounts (FSAs), and dental and vision insurance
Traditional group health insurance

Each insurance plan option has unique advantages, features, and considerations that enable small business owners to tailor their health coverage offerings specifically to reflect their workforce needs and financial capabilities better.

How Do Group Health Insurance Plans Benefit Small Businesses?

Group health insurance for small business owners, purchased through a private insurance company or the Small Business Health Options Program (SHOP), provides coverage to qualifying employees. Business owners can offer their employees either a selection of plans or a single plan to choose from.

However, SHOP coverage is only available to small employers, typically those with 1-50 employees, and it may be more affordable than non-SHOP group plans. Enrolling in a SHOP plan is often the only way to claim the Small Business Health Care Tax Credit for eligible small employers, including non-profits.

So, how do small business group health insurance plans benefit employers? These plans allow employers to reimburse employees tax-free for qualifying out-of-pocket medical expenses. If your business is larger (more than 50 employees), or if SHOP plans aren’t available in your area, you can still explore group plans through a licensed broker or insurance company.

What Are the Differences Between HMO, PPO, and POS Plans for Employers?

Health insurance coverage for small business owners can be tricky to navigate. Small businesses can pick from three main types of health insurance: HMO plans, PPO plans, and POS plans. Here’s a quick breakdown of each plan you can offer your employees.

PPO (Preferred Provider Organization) Plans

A Preferred Provider Organization (PPO) plan is among the most prevalent health insurance types. Under this plan, employees can choose between out-of-network and in-network hospitals and doctors. Employees choosing from the insurance coverage list of preferred (in-network) providers means the insurance company will enjoy a higher coverage per claim.

HMO (Health Maintenance Organization) Plans

A Health Maintenance Organization (HMO) plan provides an extensive range of healthcare services through a trusted network of providers exclusively contracted with the HMO or that agree to provide services to policy members.

Employees using this type of plan will typically need to choose a primary care physician to provide most of their care, who will refer them to a specialist when needed.

Point of Service Plans (POSs)

An employer-offered point-of-service (POS) plan allows employees to pay less if they visit an in-network doctor. Additionally, as with HMO plans, they must receive a referral letter from a chosen primary care doctor before seeing a specialist.

The Wrap-Up On Navigating Health Insurance As a Small Business

Navigating health insurance for small businesses doesn’t have to be complicated. Now you know the main insurance plans you can provide your employees and what they can expect in each plan. You also know the factors that should influence your selection decision. Armed with this information, you’re ready to explore the benefits of group health insurance options and discover the perks of offering health insurance coverage to your team today!