Looking for Health Insurance Options for Your Small Business?

Image of employee benefits clipboard with stethoscope.
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Providing employee health insurance can be very expensive for small businesses. But, the Affordable Care Act provides for tax credits to offset the costs for certain small businesses, and there are ways to decrease the premiums you'll be charged.

Whether you're eager to provide employee health insurance, or dread dealing with it, you need to become familiar with what the ACA means for your small business so you can comply with the law, as well as take advantage of the benefits it provides your small business.

Here's how you go about it.

Providing employee health insurance involves two basic decisions. First, you need to choose a strategy to find appropriate health insurance options for your small business. Then, you need to decide which type of health insurance plan you're going to buy.

Strategies for Finding a Health Insurance Plan

Use an independent insurance broker.

Insurance brokers sell a variety of plan types from several different insurance companies. An insurance broker can help you compare the costs and benefits of each plan. After you've purchased a plan through an insurance broker, he or she becomes a point of contact for dealing with health plan related issues. You can find an independent insurance broker through the National Association of Insurance Underwriters.

Shop through a SHOP exchange.

The Affordable Care Act creates exchanges called Small Business Health Options Programs, otherwise known as SHOP exchanges.

These are state-based marketplaces for small businesses to compare plan prices and benefits, and purchase affordable plans using the large-group pooled-purchasing power of the exchange. Plans offered within SHOP exchanges are compliant with ACA requirements, and are categorized into benefit tiers so you can compare apples to apples.

Buy directly from an insurance company.

Contact the insurance companies that provide small group plans in your state to purchase a small group plan directly from an insurance company. You can use this tool to determine which health insurance companies offer small business plans in your area.

Use a payroll processing service.

Many payroll processing companies offer group health plan access to the businesses that utilize their payroll processing services. Like plans purchased through exchanges, group purchasing alliances, and trade organizations, they get small businesses lower rates by pooling their customers into larger groups. They may provide added convenience by combining payroll services, health insurance options, benefits management, and other services all under one roof.

Buy Through a Trade or Professional Organization.

Some large trade, professional, and membership organizations offer group health insurance options for their members. For example, small business members can purchase group health insurance through membership in the Small Business Service Bureau.

Buy Through a Group Purchasing Alliance.

These non-profit alliances, sometimes state sponsored, create purchasing pools through which members of the alliance buy group insurance.

Your state's department of insurance can tell you if there is a group purchasing alliance in your area.

Types of Plans

Once you've decided how you're going to shop for health insurance, you'll need to decide what type of insurance plan to offer. Start by familiarizing yourself with different insurance plan types. HMO, PPO, EPO & POS—What’s the Difference & Which Is Best?

A subset of those plans is called a High Deductible Health Plan. For example, you can have an HDHP HMO, or an HDHP PPO. HDHPs have high deductibles, usually a few thousand dollars, which must be paid before the plan begins to pay for benefits.

HDHPs can be combined with Health Reimbursement Arrangements or Health Savings Accounts to make it easier for the employee to pay the large deductible. Because of the large deductible, HDHP premiums are usually significantly lower than other types of plans, making HDHPs attractive starting points when looking for health insurance options for your small business.

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