Health insurance is expensive, complicated, and sensitive--a lot can go wrong.
But small business health insurance is a must if you're looking to grow. It can help attract and retain better employees, improve productivity by keeping everyone healthy, and might even save you some money with tax credits and deductions.
(Not to mention, if you have 50 or more full-time employees, you legally have to offer health insurance. Perhaps this could change next year, but for now, let's assume so.)
Where do you start your search, though? These 4 options are some of the best out there. Take a look below and decide which is right for you and your small business.
1. Solo Entrepreneurs
If you're a freelancer, consultant, or sole proprietor, then you'll probably need to purchase individual health insurance. Check out Healthcare.gov or any one of dozens of health insurance providers or marketplaces to start your research and pick the best plan.
As an individual, you only need to satisfy your own health-related needs (and those of your dependents). Keep in mind the following while looking at plans:
- Prescription medicine you need
- Personal and family medical history
- Your medical practitioner habits (How often do you visit a generalist or a specialist, for example?)
Most small businesses go with "small group" healthcare, where the risks are spread out among the employers and employees. But with a single individual, that doesn't quite work so well--that's why, in most states, only groups of 2 or more are eligible for small group health insurance.
However, some states do allow "groups of one" to quality for small business health insurance--which is especially useful if you have a chronic condition and might struggle to get affordable individual health insurance. So check your state to see if you're eligible, and figure out what works best for you.
2. Small Business Health Options Program (SHOP)
SHOP, or the Small Business Health Options Program, is a part of the Affordable Care Act.
Each state runs its own SHOP marketplace--either on its own or with help from the federal government--that you can use to search through, learn about, and select the best healthcare options for your small business.
Here's the rundown:
If you have between 1 and 50 employees (or up to 100 in Virginia), you're eligible to select healthcare coverage plans from your state's SHOP marketplace. You can filter through our different levels of plans--Bronze, Silver, Gold, and Platinum--that indicates their prices (not their quality). Once you pick your "Metal level," your employees can go into the marketplace and pick whichever plan that works best for them in your category.
You'll rest assured knowing your expenses will remain the same no matter the specific plan, your employees will appreciate being able to choose their insurance plan, and your business might even benefit from a substantial tax credit. If you have 25 or fewer employees, you should investigate this possibility--it might save you quite a bit of money on your health insurance.
3. Private Health Exchanges
A private health exchange, also called a purchasing alliance, is sort of like a privatized version of a SHOP marketplace.
You pick a private health exchange to work with, paying only a set amount per employee depending on what percentage of their medical costs you want to cover. Meanwhile, your employees will get to pick and choose their specific plans based on those offered by the purchasing alliance.
With a private health exchange, you don't get the tax credits or huge selection of the SHOP marketplace. However, these options can be more competitively priced or higher quality, come with success agents who can advise you, and often let your employees spend pre-tax dollars on health insurance to save money.
4. Direct Purchase
If you want to put in the time and energy, purchasing a small group health insurance plan directly from a provider could save you money.
While this might satisfy your inner entrepreneur and cut some costs, there are a few ways this could go sour.
First, some insurers simply don't sell direct--so your selection is more limited than you'd think.
Second, you'll be the one responsible for all paperwork regarding initial enrollments, yearly open enrollment periods, billing, eligibility, and claims. It's not the most efficient process, and it won't get easier as you grow.
Finally, there's a good chance that you miss a better plan because you're unfamiliar with the industry or make a purchasing mistake because of confusing terminology. Health insurance is a complicated area with lots of choices, and messing up could mean a lot of time and money wasted.
While there are a few other options--like checking out your local trade associations or subsidizing your employees' individual health insurance plans--these 4 paths are some of the best choices for your small business. These paths could change in 2017 with the new administration, but for now, they're the best place to start.
Remember: always keep in mind the health care needs of you and your employees, and figure out how much your business can spend!