The present tax system and government insurance law discourage small business owners to purchase policies for workers. In America 50% of uninsured are employees of small business. Small business is backbone of American economy. In the absence of health care coverage in small business, quality of workers joining them is deteriorating. Small entrepreneurs require tax help to finance health insurance plans to their employees.
To assist small business, government should establish refundable tax credit. Under this scheme the tax burden of an employee of small firm should be reduced by amount contributed by him in the health insurance. Workers may be allowed to purchase the health care insurance of their choice from the pool of insurance available consisting of Unions, Churches and other intermediaries, instead of restricting them to buy from their employees only.
Tax and regulatory obstacles should be removed to encourage small business owners to purchase adequate health insurance for their workforce.
It is feared that American small business might lose its competitive edge in the absence of qualified professionals, who do not prefer to join them without health insurance benefit. Today in America, health insurance provided by employer is one of the most attractive perk, next only to paid free vacation.
Small profit margins and rapid increase in health insurance costs is compelling small business owners not to provide health insurance coverage to his employees. In America largest association of small business owners, self employed and small independent contractors REALTORS today, 28% of the 1.3 million realtors members of National Association of Realtors are without health insurance and they have cited prohibitive cost as the main reason behind it.
As a small business owner you must have employee related data, such as; name, gender, date of birth, dependents, before deciding for group coverage. You should also have basic knowledge about health insurance terminology to arrive quickly at good decisions. Common terms used in health insurance are given below:
Basic Medical Plan: Which pays for a fixed maximum amount, agreed mutually for a certain agreed time frame.
Claim: You have to file to obtain payment from insurance company
Co-insurance Specified portion of premium cost you have to share with insurance company.
Co-payment: Fixed amount you have to pay to insurance company, every time you utilize the services.
Deductibles: It is the amount you have to pay per annum before insurance company commences payment of claims.
Exclusion: Medical conditions which are not covered in the insurance plan.
Major Medical: Plan with very wide coverage compared to basic medical plans coverage, can be increased by paying additional premium.
HMO: health Maintenance organization
PPO: Preferred Provider Organization
Pre-existing Conditions: Illness, which requires treatment, 3-6 months before purchasing the health insurance policy.
For small business, group health insurance plans are suitable. Health insurance plan should be such that it meets aspirations of employees and suits your budget also. If you select proper health insurance plan for your employees it will result into a healthier employees morale and higher efficiency, which would consecutively lead to greater profits. Health insurance benefits in small business is tabulated below
|Small Business owners||Workers|
|1.Portion of premium paid is deductible from tax burden||1.Amount paid as premium is not taxable.|
|2.Better quality of workforce available||2.Mutual peace against medical emergency.|
|3.Talented employees remain loyal||3.Insurance plan benefits can be readily accessed online.|
|4.Results into higher productivity.||4.Need based insurance plans are availed.|
|5.Workers tend to be regular.||5.Maintain good health.|
|6.Employee administration improves through provider organization.||6.Retirement and tax saving benefit can be obtained through health saving accounts.|
|7.Workers tend to be regular.||7.Workers have good health.|
Before deciding on health insurance plans you should determine categories of your employees i.e.; full time, part time, exempt, non-exempt etc. After this decide premium cost sharing plan for each category. You should maintain transparency and consistency in providing plan to each category. Plans you can choose are single, maybe for full time employees only, where full premium is borne by the employer.
Types of health insurance plans available are managed care or fee for service. The suitability of plan depends upon situation of your unit, medical/ health care facilities available in your vicinity, benefits covered in plan and financial constraints. Managed care plan are low cost but have limitations of doctors, hospitals and health care providers. There are four types of managed health care plans:
1.Health Maintenance Organization: They are useful to reduce out the pocket expenditure, co-payment and deductibles. Employee has to select a primary care physician, who manages all health care and makes references for specialized treatments if required.
2.Preferred provider Organization (PPO):In such a plan deductibles are much higher compared t HMOs. Here employees can choose physicians and providers outside the network also
3.Point of Service Plan (POS): This plan combines HMO & PPO plans. In this plan member has an option to pay a fixed charge to use any particular provider network.
4.Individual Practice Association (IPA):This is also a form of HMO. Where providers in the network agree to provide healthcare at a pre-negotiated charge.
5.Fee for Service Plan:This plan is also called indemnity insurance élan. This plan is available to individuals or groups separately or through employers. Here, choice of health insurance care provider is limited to the list of sponsoring insurance company
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