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Small Business Health Insurance:
Soaring medical costs has seen a corresponding increase in health insurance rates, so much, that buying an individual health plan is out of reach of the average American. If you are the owner of a small business or an entrepreneur employing at least two people then you should explore the options offered by a small business health insurance plan.
Small Business Health Insurance (SBHI) is provided to small businesses or association with 2-50 employees. The SBHI plan not only takes care of your health needs but also that of your employees. The plan also helps by helping spread the financial risk between all members, which translates into lower premiums and more extensive coverage for everyone. Employer contributions to a SBHI plan is usually 100% tax deductible and employees also save on payroll taxes.
Choosing a Small Business Health Plan:
Successful small businesses are major contributors to creating new markets, innovations and massive job opportunities that fuel economic growth and prosperity. Legislation formulated by the government also provides many benefits to SBHI plans. Health Insurance is a coveted benefit you can offer your employees. When structuring a health insurance plan, begin first by determining the needs of your employees, discuss options and benefits. Also make it clear that substantial benefits will be covered but not all and more importantly some costs will have to be shared. Once a blueprint of your and the employees health plan is formed contact an individual insurance agent who will help you with the plan.
He will also help you with different coverage options, alternative plans and quotes as well as servicing your policy. Once you have selected an insurance company and signed a contract the company is obliged to provide all covered employees with a legal document called the Evidence of Coverage (EOC), that describes in detail the covered benefits and the enrollees rights under the plan. Employees should be encouraged to read and understand this document.
Cost of a SBHI Policy:
A SBHI policy is less expensive than an individual health policy. A SBH plan provides its members a set coverage with rates calculated using the number of individuals in the group. Employers are required to pay a percentage of an employees individual premium (about 20-50%). Although rate calculations vary from state to state, the cost of a SBHI plan is based on the characteristics of each member of the group such as age, health status, occupational hazard, tobacco use etc. The health insurance policy format that is chosen is applicable to all members.
Benefits of a SBHI plan:
An SBHI plan benefits employers and employee alike. If you own a small business you can save on personal health costs, increase tax deductions and boost job satisfaction. A SBHI policy allows employers to hire and retain the best manpower. Health insurance coverage is a prime motivating factor for good employees to stay and perform well thereby increasing productivity. Absenteeism decreases and the knowledge that an employer is taking care of one of your major expense spurs employees to higher performance levels.
When employees access health care through an employer, their share of the premium is taken out of their paycheck before taxes. This is beneficial to the employees or else they would have to pay with their after tax money.
In a SBHI policy the insuring company assess the risk of the group as a whole. If you are an older employee with health issues, being part of a group is less expensive and safer since it is harder for insurance companies to drop you if you become expensive for them.
Eligibility for a SBHI policy:
All small businesses, non-profit organizations with 2-50 employees can take advantage of this type of health plan.
Working of a SBHI policy:
SBHI policies fall into two categories, Indemnity plan and Managed care plans.
Indemnity plans offer more flexibility to your employees in their choice of doctors and hospitals. They are also not required to have a primary care physician, but they are required to pay an annual deductible. Also the charges for the service must be paid upfront and claim filed later. Controlling costs within an indemnity plan is possible by raising the deductible and increasing the employer's portion of co-insurance.
Managed care plans are more consumer friendly, involve less paperwork and are more popular with group insurers. These plans use a network of health care providers. Doctors and hospitals within the network provide services at pre-negotiated rates and submit their bill directly to the insurer.
A Health Savings Account serves as a medical and retirement planning savings account that accrues tax-free interest. Your employee can utilize the money towards health expenses or let it accumulate as a retirement benefit. You can opt for a compatible SBHI plan to use with a Health Saving Account.
Some Important Terms:
A Risk adjustment factor (RAF) is a tool used to assess your company's premium. If your RAF is high it means that the insurer has assessed that factors such as low group size or prevalence of a pre-existing medical condition to warrant a higher premium. A low RAF implies a low premium.
A benefit rider is an additional insurance benefit that is purchased in order to cover services that are not covered by the insurance plan. For instance optical tests, is an additional benefit not a standard benefit of the plan. The inclusion of a benefit rider requires your firm to pay an extra charge.
A health insurance premium is the total amount that must be paid in advance, so that you can obtain coverage for a particular level of service.
Coverage offered by a SBHI policy:
Depending on the coverage you have obtained, most SBHI plans often pay for part or all of the cost of the following services:
1) Standard service such as doctors visits surgery, hospital costs, physical therapies, mental health and substance abuse.
2) Prescription Drugs
3) Preventive and diagnostic services such as physical exams, immunizations, annual gynecology exams, cancer screening, x-rays, laboratory tests and second opinions for surgery.
4) Wellness related services such as programs to help you stop smoking, weight loss programs, stress control as also discounts at fitness facilities.
5) Emergency care
Non-covered service or exclusions include:
1) Cosmetic surgery
2) Long-term care
3) Hearing aids
4) Over the counter drugs
5) Work related injuries or illness (these are covered under worker's compensation coverage).
SBHI plans work out well for both employer and employees. They afford you health care benefits, tax deductions and a hassle free work atmosphere, leaving you to concentrate on your business.
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