Young female doctor smiling while standing in a hospital corridor with a diverse group of staff in the background. Concept: how to choose health insurance
Betsy Wise
By: betsy_wise
Read in 8 minutes

How to Choose Health Insurance for Your Small Business

Going shopping for health insurance isn’t intimidating when you have answers to questions. You don’t want to overspend on a small business health care package but neither do you want to skimp on important features. This post will answer frequently asked questions on how to choose health insurance so you make the right choice for your business.

Guidelines on How to Choose Health Insurance

As you read through these questions, jot down any other concerns that come to mind on how to choose health insurance. You can contact a health insurance advisor to help you sort through any additional questions and seek advice on specific matters.

  1. Does your small business qualify for group insurance? Generally, if you have at least 2 employees living in different households, this small group should qualify for business health insurance. However, in some states, a self-employed business owner with one employee and dependents is considered a small group. Businesses with over 50 employees are designated as large groups. Contact a health insurance broker to find out specific regulations for your region and state as they keep up to date on federal and state requirements.
  2. Who should you offer health insurance? If you offer insurance to one full-time employee, you must offer it to all full-time employees. Some employers also provide health insurance to part-time employees to qualify for group insurance and better rates.  eHealth insurance, an online health insurance exchange, reported that most states require between 50 – 75% of employees to participate in group health insurance. States may also require employees to validate where they have other insurance such as through a spouse’s job or Medicare.
  3. What’s your budget for health insurance? An important component of how to choose health insurance is that premiums must be affordable for both you and your employees. If you can only contribute 50% to your employees’ health insurance, will your employees be able to pay their share of the premiums? Depending on the plan you choose, employees may also be responsible for copays, deductibles, and other costs. According to a 2017 report by PeopleKeep, the average cost an employer pays per month for single coverage is $540 and $1,468 for family coverage. In this example, if you multiply those rates times 10 single coverage employees and 10 family coverage employees, the employer’s monthly cost totals $20,080. That amount can be reduced when employers require their employees to pay a portion of the premiums. That said, employers always run the risk of having employees decline participation in the plan because they can’t afford the premiums. Employers also need to budget for costs to pay someone to administer the group plan which averages around 13 hours per month and a total of 30 hours during the annual open enrollment/renewal period.
  4. Do you know what benefits are most beneficial for your employees? As is normally the case, some of your employees may be healthier than others. Have your employees complete a survey listing the benefits that are most valuable to them before deciding on a plan. You should be able to choose a plan that accommodates most of their medical needs. Your priority is to offer insurance that has valuable benefits at a reasonable price. Some businesses use HRAs (health reimbursement arrangements) where each employee has a monthly allowance and can purchase a personal health insurance policy. One example of an HRA is a QSEHRA (qualified small employer health reimbursement arrangement). After employees spend their allowance, the employer reimburses them. The money employees receive is tax-free. This type of arrangement helps employers set allowances that fit their budgets and employees can choose the benefits they want.
  5. What types of policies should you consider? HMO (health maintenance organization) plans are usually cheaper when used within a designated network of providers. PPO (preferred provider organization) helps control expenses but usually costs more than HMO plans. POS (point of sale) plans provide coverage for services outside of the provider network. They are normally priced at rates somewhere between HMOs and PPOs. EPO (exclusive provider organization) has pricing similar to POS plans. It provides covered services within a network but the insured can see a specialist without needing a referral. What’s more, if the plan you choose has a high deductible, you can set up HSAs (health savings accounts) that employees make contributions to and help offset their out-of-pocket costs.

By working with an independent health insurance broker, they can help narrow down your choices and find a variety of options to fit your budget. They also educate shoppers about options offered by multiple insurance companies to receive the most benefits.

A health insurance broker who doesn’t work for a specific insurance company normally provides unbiased advice on group coverage and makes recommendations regarding available alternatives. They are advocates on your behalf should you need to deal with an insurance company about coverage or billing issues. Online insurance resource center marketplaces like eHealth do not charge for broker services although some companies do charge.

Camino Financial Provides Access to Extra Funds

Providing health insurance for your employees comes at a cost. It’s possible you may not have money in your budget to cover the expense. However, that doesn’t mean you can’t move forward and include this benefit as part of your employees’ benefits package.

At Camino Financial, our mission is to help entrepreneurs like you reach their business goals. Our online loan process is simple, transparent, and fast. The small business loans we offer are unsecured, have fixed terms, and payment terms ranging from 18 – 60 months. Additionally, you have 24/7 access to tools and resources to provide information on finances and business management. For your convenience, we’re only a click, text, or phone call away and look forward to assisting you with your financial concerns.

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