Small businesses with a limited number of employees need to provide them with health insurance cover. With expenses always a concern, small businesses look for maximum cover and high quality services at the lowest possible cost.
It is customary for individuals to expect health coverage from employers, who often cover dependents of the employees as well. In fact 60% of the US residents getting medical cover have received their health care plans from their employers.
Small businesses providing comprehensive medical cover have a lower attrition rate, and attract a better qualified set of workers. They also benefit from the tax incentives they get.
Providing health insurance to employees is a huge financial drain on small businesses due to the spiraling costs of prescription drugs and medical treatment. Increasing the kind of medical coverage being provided is changing, with small businesses looking for limited coverage medical care.
Health insurance companies have specific plans for different business sizes. Small businesses are those that employ between 2 to 50 employees. The business selects the group insurance it wants and enrolls its employees, paying at least fifty per cent of the monthly premium, the balance being paid by the employee himself. The insurance premium is tax deductible. Group insurance cannot be denied due to medical history, and this is a big advantage since everyone gets cover, even those who may have gone uninsured otherwise.
The new health bill passed by the Obama administration will provide minimum health insurance coverage under the state run insurance exchanges at reasonable premium rates. Small businesses or those with fewer than 100 employees will have access to SHOP exchanges. SHOP exchanges are Small Business Health Options Programs run by the state to provide medical insurance to businesses lacking the bargaining power of larger establishments. These will cover the employers and the employees.
Some of the features available for small business health insurance are:
- Preventive medical services get first dollar benefits
- Employers allowed to select hospitals and doctors from a long list of options
- Specialists can be consulted without referrals
- Tax benefits
- Worldwide emergency coverage
- Independent advocacy service will help employees and employer to navigate the system for money saving alternatives
States regulate health insurance and many states subsidize insurance plans for small businesses. Some states provide the facility to small business owners to form a group to apply for health insurance, and some others guarantee group insurance to small businesses that are sole proprietorships.
Ways for small businesses to reduce insurance costs
A large proportion of the expenditure of a small business is the premium it has to pay for health insurance. Since it is an essential expense, it cannot be stopped or discontinued. But the expense can be minimized in the following ways:
- Increasing employee contribution to the premium by even 5-10 per cent will make a big difference to the costs of the small business.
- Starting a wellness program to ensure that the employees remain healthy and do not need expensive treatment.
- Opening a health service account will help since these are tax free accounts and can be used to pay for insurance costs
- Opting to join groups of small businesses since group health insurance is lower
- Search for the company giving the cheapest health insurance coverage.