How to Choose Health Insurance Plans for Your Small Business

How to choose health insurance: 

1. Understand requirements

   Businesses with 50 or more full-time equivalent employees must offer “affordable” health coverage under the Affordable Care Act (ACA) or face penalties. The ACA defines “affordable” as premiums that are less than a set percentage of an employee’s household income.
   
   Also keep in mind that most insurance companies require that you cover at least half of an employee’s premium.

2. Consider your budget 

   Different plans and carriers come with different costs. Factor in monthly premium costs and possible administrative fees. 
   
   The BLS found that employers typically cover 78% – 80% of an employee’s total health insurance cost. The more expensive the plan, the higher your health coverage bill. 
   
   Not to mention, some employees may opt for family coverage, which drives up your costs, too. 

3. Determine employee needs

   You might want to check with your employees to learn more about what they’re looking for in health insurance. 
   
   For example, you can find out whether employees need single vs. family coverage, whether they need medical, dental, and vision benefits, and what types of plans (i.e., low deductibles or high deductibles) they want. 
   
   You can send out a survey to gather this type of information. 

4. Compare plan types and carriers

   There are hundreds of carriers, including big names like Anthem, Cigna, Aetna, and United Healthcare. 
   
   Each carrier offers different plan types, such as a high-deductible health plan (HDHP) and a preferred provider organization (PPO). The plan type you choose impacts how much you pay. 
   
   For example, KFF found that employers spend an average of $7,016 per employee per year on HDHPs, and $7,889 on PPOs for single coverage. 
   
   Decide which carrier and which plan type(s) you want to offer your team. 

5. Set up your plan

   You may be able to set up your health insurance plan through a health insurance marketplace (e.g., SimplyInsured), a private insurance broker, the carrier directly, or the SHOP Marketplace. 
   
   To streamline the way you shop for health insurance, manage benefits, and make deductions, see if your payroll provider has a health benefits integration. 
   
   For example, Patriot Software integrates with SimplyInsured, allowing you to offer benefits that connect directly with your payroll. That means you can manage everything within your payroll software account.  

6. Notify employees

   Let your team know about their health coverage options. Provide resources explaining options, employer and employee share, deductibles, and more. 

7. Reassess each year 

   Review your health benefits offerings annually. Health insurance costs typically increase each year, which may prompt you to shop around for a new plan. 
   
   Or, your employee headcount may change, causing you to update the benefits you offer to stay compliant with the ACA.  
   
   Whatever your situation, you can control health insurance costs by comparing plans, offering multiple options, and taking advantage of tax incentives.