Small Business Health Insurance Rates
If you are looking for small business health insurance, start by comparing small business health insurance rates. Small business health insurance is health insurance typically available to companies of 2-50 people. States set criteria for providing coverage. As a result, some insurers may require a minimum percentage of eligible workers participate in a group health plan. Although employers may decide only employees having full time status are eligible for insurance coverage, employers and insurers cannot deny coverage to employees and their dependents based on their health status. This would be nondiscrimination.
Employers may be required by insurers to pay a minimum share of their workers’ health insurance premiums. And insurers can refuse to renew coverage for nonpayment of premiums, or if they feel the insured has committed a fraud.
There are certain tax advantages available to the employer and employee if the small business purchases health insurance for the company. Employees can deduct their premium costs from their pre-tax wages, while the small business employer can save as much as 40 percent after FICA and state taxes are subtracted from the difference between revenue and expenses.
Employees consider health insurance to be the most important employee benefits. However, it is becoming more cumbersome for small businesses to afford benefits for its employees. Benefits tend to reduce staff turnover and cost of absenteeism, limit disability and workers; compensation claims, and attract and retain better employees, who help the small business thrive and grow.
Small business health insurance rates vary depending on the number of employees and type of coverage needed. Any compensated owner, officer, partner, or permanent employee working a minimum of 25 hours/week may be eligible to participate in a small business health insurance plan. However, anyone covered by a small business health insurance plan must have verifiable tax documentation.
According to a 2006 survey by America's Health Insurance Plans, a trade group representing health insurance companies, it cost small businesses an average or $311 per month for health insurance for their small group plans. It cost a family of four an average of $814 per month. In another survey, New York-based Commonwealth Fund, a health care reform advocacy group, reports “small business health insurance costs average 18 percent more than those for larger businesses.” California health insurance costs increased 10 percent in 2006. According to Kaiser Family Foundation, health insurance premiums paid by employers increased 6.1 percent in 2007, with the average annual premium cost per family coverage rising to $12,106.
As a result, “more than 45 million Americans are uninsured, and approximately 60 percent of the uninsured are employed by small businesses.”
Ways a small business may help reduce their health insurance costs include:
1. Wellness Programs that include disease management for maladies such as asthma and diabetes. Flu shots, cancer screenings, smoking-cessation sessions and a 24-hour nurse hotline may also contribute to company wellness. Motorola,
Inc., for instance, found that “for every dollar it invested, it saved $3.93.” Heavy machinery manufacturer, Caterpillar, projects its wellness program “will save the company $700 million by 2015.” Wellness programs typically have significant participation. Pfizer Inc. reports as much as 85 percent of its employees participate in some aspect offered through its wellness program, and 80 percent of its employees utilize on-site fitness and physical therapy facilities.
2. Reduced Coverage/Cost Sharing that asks employees to contribute more to the plan, pick up more of the deductible, or assume co-payments and co-insurance. A deductible is the amount that insured persons must pay for covered services before medical expenses are paid by the health plan. Once the annual deductible is met, the plan begins paying toward the member’s medical expenses. Annual deductibles are currently between $100 - $500 per person annually. Co-payments are fixed dollar amounts that insured persons pay each time they visit the doctor, clinic, hospital or medical facility. Typically, the co-payment is a $10 payment when they see a primary care physician and a $30 payment if they go to the emergency room. Coinsurance is the percentage of a medical bill paid by the insured person. Typically, enrollees pay 20 percent and the health plan pays 80 percent.
These options help reduces overall small business health insurance costs, although it tends to be very unpopular with employees (and unions, when applicable). It is also common for small businesses to cover medical, and exclude dental and vision insurance or provide dental and vision insurance for employees and contribute to a health savings account.
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