Small Business Health Insurance
Are you wondering how a small business health insurance plan can help you? Health insurance is a major advantage of employment. Most of the large organizations across America offer group health insurance plans to their employees, but it is not always the case with small businesses. In fact, most of the uninsured people are those who work in the small business segment due to absence of such facility through their employment.
Also, according to small business owners it is the high cost of coverage that dissuades them from purchasing small business health insurance. These people also face significant problems in getting the right help to understand this market. On the other hand, insurance agents/advisors do not consider them of having any business potential, which dissuades them from approaching any small business owner. Similarly insurance companies do not find small business segment attractive enough to spend on marketing and promotion targeted at this segment.
Under this backdrop, small business health insurance has been planned, which makes any small business with 2 to 50 employees eligible for the plan. The small business health insurance offers significant visible and invisible benefits to small business owners, some of which are:
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Employees remain health and productive
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It creates a corporate image of the employer and therefore attracts prospective employees.
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It fulfils one of the most basic social needs of each employee
Different Small Business Health Insurance Plans
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BASIC COVERAGE: This plan provides necessary hospitalization for a pre-decided number of days, which covers expenses on items such as room & board, physician and nursing services provided in the hospital, x-rays, tests, operating room, medicines, surgical supplies etc. It also covers expenses incurred on emergency room.However, this plan has many limitations for example limit on covered stay in hospital, limit on total payments etc. Also, it mostly has deductibles and co-payments.
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MAJOR MEDICAL: This plan is excellent protection in case of serious and/or prolonged illness that has high cost of treatment. Benefits are usually paid after exhaustion of benefits of the basic plan. Few states have the prescribed the minimum limits of coverage e.g. in New York State, a major medical plan must provide at least $100,000 of coverage. Payment to the service provider such as hospital, physician etc is paid directly as per agreement. The insured person gets reimbursement on the basis of reasonable charges, a % of reasonable charge or a previously mentioned dollar amount. Such coverage is called a fee for service or “indemnity plan”.
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SELF-INSURING: In this type of health insurance, small business employers take the responsibility of paying directly for claims self-insuring their employees. The differentiating feature in this case is that the employer controls the money that would have otherwise gone as premium payments. This way owner avoids premium taxes. However, self-insuring plan has disadvantages also such as the employer becomes responsible for claim administration. Also, for some employer, this method will not result in any lower cost compared to purchasing policy from any insurance company. Also, in this case, employer has to bear any unexpected increase in the cost of the claims.
Multiple Employer Welfare Arrangements (MEWA)
MEWA are regulated by both federal and state laws and regulations related to license to operate business, minimum reserve requirement, policy benefits provision, premium rates etc. Therefore, before opting for this plan, it is must to check that the offered plan meets the legal and regulatory requirements.
Supplemental Small Business Health Insurance Coverage
Apart from the above, there are several other types of supplemental insurance plans. However, like any other insurance plan, these supplemental plans enhance the cost of the employer. A few of the most important supplemental coverage are dental care, eye care, prescription drugs etc. Protection may also be offered for long-term care, hospice care and as an addition to Medicare payments.
Service Arrangements Under
Small Business Health Insurance:
Cost of Small Business Coverage
There are broadly three ways cost of coverage is managed:
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First Dollar: This pays for the whole cost of all the services and requires minimum or no out of pocket expense.
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Cost Sharing: In this case, employees contribute their share to the total cost of the care which may be based on a predetermined percentage of the cost or at a rate in ratio of their salary.
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There is also a third type, in which, employers pay the complete premium for the employees but requires contribution from the employee for all or a part of the premium meant for dependents. Deductibles and copayments are other forms of cost sharing.
Since there are different payments options, while comparing plans, analyze carefully the amount of deductibles and/or co-payments. Also, compare plans on basis of range of covered services/benefits, exclusions from the benefits and the limit on the maximum coverage, if any.
Compare health insurance plans available to you now by using our free health insurance quote finder!
