Health Plan Options for Your Small Business

Running a small business in this tough economy is a Herculean job. It is not just about planning and financing, it is also about talent acquisition and retaining them. One of the sound decisions you as a small business owner should make, is to provide health insurance benefits to your employees.

Benefits of Providing Health Insurance

  • Providing health insurance to your employees will help retain your key employees. This is because they know that their families are also protected from financial losses in case they are seriously ill or injured.
  • When an employee is insured, his productivity at work is likely to improve and this in turn will enhance the company’s performance.
  • A point worth mentioning here is that health insurance premiums are fully tax-deductible and are non-taxable income for your employees. That is, health insurance payments are exempted from basic salary when calculating an employer’s Medicare and Social Security payments.
  • Always buy group health insurance because you can get them at a lower cost than when you buy them individually.
  • Choose an insurance company who’s willing to negotiate the consultation charges with doctors and health care providers. Thereby, you can get access to price reductions.
  • As a small business owner, you can also offer other benefits to your staff such as Health Savings Account (HSA), Health Reimbursement Arrangements (HRA) and association sponsored plans. Its worth pointing out that HSA and HRAs have added tax benefits too.

Factors to Consider When Buying Organizational Health Care Insurance

Patient Protection and Affordable Care Act is the new health care law that was introduced by President Obama. According to this law, every company small, medium or big should ensure that if they have more than 30 full-time employees, they are all insured, or else they can be subjected to a penalty of as much as $2,000 for every extra employee beyond 30. The law also says that irrespective of the size of the businesses, it will provide tax credits of 35% to all those businesses who have health cover for their employees for every dollar spent on the premium costs. However, we have to take into consideration the factors other than the premium amount.

  • Third party administrator – Many health care insurance companies do not outsource their settlements but prefer to settle it in-house. The in-house settlement process is easier and quicker. However, you should ensure that the company’s in- house process is available in your city, or at least in your own state.
  • Check out the network of hospitals- Before buying the policy for your employees, you need to check whether the insurance company has a reputed hospitals on its list. For instance, if you have to admit one of your employees immediately, you need to know whether the best hospital in your vicinity is in your network of hospitals.
  • Find out the relationship of the insurance company with the network hospitals – You should check the credibility of the insurance company with the network hospitals. The reason is the insurance company will provide cashless hospitalization. If they do not settle their claim with the hospital in time, then the hospital would be reluctant to take you or your staff as a patient. Not only that, if the company settles only part of the claim, then the hospital will increase your bill to claim the whole amount.

Health Plan Options for your Small Business from 2014

In a couple of years, small businesses will be able to purchase private health insurance through State-based competitive marketplaces called Affordable Insurance Exchanges. This will help small businesses compare the various health plans and also choose a health insurance plan that would suit the needs of their employees. The health coverage purchased through Exchange will be eligible for the tax credit.

Small Business Health Options Program (SHOP), a new program under Exchanges, will be launched in 2014 to offer new options and choices to small businesses. Through SHOP, SMB owners can avail a variety of Qualified Health Plans to their employees and the employees can choose the plans that suit their needs and budgets.

Other interesting news for all small business owners is that all the health care plans purchased through SHOP starting from 2014, will get a maximum tax credit of 50% of the employer’s share of health insurance coverage. Click here to know more about tax credit after 2014.

The largest employee-related expenditure faced by many small businesses next to salaries is health insurance. Quality health insurance package is required, to avoid employee turnover and also to enhance the productivity of the employees. However, check out the credibility of the health care insurance companies before purchasing them.

Flickr image by Leader Nancy Pelosi

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