In today’s market, small business owners who hope to recruit and retain outstanding employees can’t help but offer health insurance plans to their staff. Not only do health benefits make workers more likely to stay with their companies, but a healthier workforce is also a more productive one. Of course, obtaining affordable health insurance plans for small teams can be a challenge. Fortunately, health insurance options specifically for small businesses are available.
What is Health Insurance for Small Businesses?
While the Affordable Care Act stipulates small businesses with fewer than 50 employees are not required to provide health insurance to their employees, that doesn’t mean that they can’t offer the option to attract the best and the brightest workers. Fortunately, there is plenty of health insurance for small businesses to choose from.
How much does small business health insurance cost? It varies. Many consumers have found that obtaining health insurance coverage as a small business is more affordable than for individuals seeking insurance on their own. Through a small business health insurance option, a company contributes toward a portion of the cost as a part of the workers’ salary, then each employee pays the difference through a payroll deduction.
What the small business health insurance plan covers will vary depending on the insurance company and the options purchased, but some basic healthcare costs are always covered by law.
How Does Health Insurance for Small Business Work?
How does health insurance for small business work? A small business owner can choose a plan that best meets their coverage and cost needs. The business pays a portion of the premiums, and employees usually are responsible for the difference in the premiums paid as a payroll deduction. Then, when an employee seeks healthcare, they pay copays, deductibles and other noncovered costs while the insurance company pays the rest of the medical bill, provided it was not out of network care.
What Does Health Insurance for Small Business Cover?
Like other health insurance, small business health coverage benefits cover a variety of medical services, although how much coverage can vary greatly between plans. Common coverages include:
Prescription Drug Coverage
Small business health insurance covers prescription drugs, although specific costs and restrictions will vary based on the insurance company and insurance plan.
Emergency Care Coverage
Small business health insurance offers emergency care coverage, paying a portion of the cost when covered patients receive emergency medical care. Of course, the amount of out-of-pocket expenses will vary based on the health plan and the insurance company.
Outpatient Care Coverage
Small business health insurance also covers outpatient healthcare as part of the health insurance benefits. Specific limitations on services and out-of-pocket costs will vary based on the health plan.
Maternity Care Coverage
Health insurance companies also cover maternity and prenatal care as part of small business health insurance benefits. Often, covered patients will have very little out-of-pocket costs to deliver a baby, but the amount will vary based on the health plan.
Preventative Healthcare Coverage
Many preventative healthcare services are covered in full by small business health insurance. The ACA dictates that certain preventative screenings and other healthcare be fully covered, but be sure to check the specific offerings of each available health plan.
Mental Healthcare Coverage
Small business health insurance also covers mental healthcare, including many inpatient and outpatient mental health services. The exact coverage options will vary depending on the best health insurance providers and the group plans.
Other Medical Services
Many other healthcare services – including those for pre-existing conditions – are covered by small business health insurance providers, but since group coverage varies it’s important for a small business owner to investigate the various coverages from any medical plans before selecting the best for their company and their employees.
What is Not Covered by Small Business Health Insurance Policies?
While most small business health insurance benefits are fairly comprehensive and cover a variety of healthcare services, health insurance still has its limitations and options it does not cover, including:
- Elective and cosmetic procedures – Most health insurance will not cover cosmetic procedures and will have many restrictions and limitations on what it considers elective procedures if it covers them at all.
- Out-of-network services – Many health insurance companies have determined a network of healthcare providers with whom they will work. If a covered patient seeks medical care outside of the network, they may not have coverage.
- Experimental or new technology – A small business health insurance benefits package often will exclude coverage of procedures, devices and drugs it deems as too new or still in an experimental phase.
- Off-label drug use – While many physicians will prescribe drugs for an off-label purpose, many insurance companies will decline to pay for those prescriptions.
Do Small Businesses Have to Offer Health Insurance and Health Benefits?
Under the U.S. Affordable Care Act, small businesses with fewer than 50 employees do not have to provide health coverage to their workers. Larger companies that fail to provide health insurance benefits to their employees face financial penalties from the government. Many small business owners, however, choose to offer group health insurance plans as an added benefit in order to recruit and retain the most talented workers. Small business employees who are not otherwise covered might be eligible for special plans through the ACA marketplace.
What Are the Small Business Health Insurance Options?
A variety of health insurance options are available to small business owners, including:
- Under the ACA, small business owners can purchase health insurance for their employees through an approved insurance company with the Small Business Health Options Program (SHOP). By providing health insurance with a SHOP plan, employers can offer plans from a variety of insurance companies. Small business owners providing SHOP health insurance to their employees might qualify for a Small Business Health Care Tax Credit, which can help with the cost of providing coverage.
- Small business group health insurance options are categorized by tiers, each featuring varying monthly premiums, copays and out-of-pocket limits. This way, people can choose whether they want higher premiums with more extensive coverage or more cost-effective health insurance that might have more limitations and restrictions on what it pays. A group health insurance plan might offer options in gold, silver, bronze and platinum tiers.
- Small business owners also can choose to work with an insurance broker who will research and compare available health insurance plans to determine the best option for a small business at no additional charge. The broker can help the small business owner understand options like HMOs, PPOs, association health plans, health reimbursement arrangements and even health insurance acronyms.
- A small business health insurance plan may allow for an HSA for small business, which is a type of healthcare savings account. That way, qualified employees can make pre-tax contributions to the HSA and use the funds to pay for non-covered healthcare costs.
Laws on Small Business Health Insurance Plans and Requirements
In the United States, small business health insurance is governed by the same law as most other healthcare plans: the Affordable Care Act. This law, fully enacted in 2014, requires most U.S.-based employers with 50 or more employees to provide health insurance options for their workforce. It also dictates what sort of health insurance coverage insurance companies must include in their health plans. The ACA even established a health insurance marketplace where consumers and small businesses can shop for the best and most affordable health insurance options.
While the ACA doesn’t require most small businesses to provide health insurance for their employees, it did benefit small business owners by establishing the SHOP network through which they can choose from a variety of insurance companies and health plan options.
Employers who offer health insurance benefits to their employees also must abide by COBRA. Under this law, when an employee is terminated they must be offered the opportunity to extend their health insurance coverage for one of three maximum coverage periods. Likewise, employers who offer health insurance to their workers must also follow the Health Insurance Portability and Accountability Act (HIPAA), which safeguards employees’ private personal and medical information.