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Navigating how to compare health insurance plans can feel overwhelming, especially for small business owners juggling growth and employee needs. With limited time and expertise, many owners struggle to understand the nuances of health insurance coverage and costs. The healthcare system is notoriously complex, with various providers, brokers and consultants competing for a share of the $3.5 trillion U.S. healthcare market.
When comparing health insurance plans, it’s crucial to look beyond just monthly premiums. Group policies are structured around key terms and conditions that directly impact your business and employees.
Once you’ve identified a trusted insurance partner, be sure to carefully evaluate the different types of small business health insurance plans available. Most companies opt for managed care plans, such as preferred provider organizations (PPOs), point of service (POS) plans and health maintenance organizations (HMOs).
These comprehensive major medical plans offer access to a network of healthcare providers and are regulated under the federal Affordable Care Act (ACA).
Once you’ve familiarized yourself with the various types of small business health insurance plans, the next step is to dig deeper into the specific coverage options available to your employees.
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Since the primary goal of health insurance is to cover medical expenses, the extent of coverage should be one of the first factors you evaluate.
Some plans with lower premiums may come with dollar limits on benefits or lack coverage for services that ACA-qualified plans are required to provide.
When comparing health insurance plans, it’s important to assess your employees’ typical healthcare needs. Consider how frequently they visit doctors and their general health.
You can also survey employees (in a HIPAA-compliant way) to understand their satisfaction with current offerings. Even if your existing plan has worked well, newer options may allow you to offer a variety of plans tailored to different health conditions or future needs, such as maternity care.
It’s critical to weigh costs against coverage, comparing benefits, networks, prescription pricing, out-of-pocket maximums and other key factors.
Generally, plans with lower premiums often come with higher deductibles, requiring employees to cover more costs upfront before insurance takes effect.
Additionally, depending on the type of plan, employees may be responsible for paying either a fixed dollar amount or a percentage of the cost for medical services.
Offering a range of plans allows employees to choose the level of coverage that best suits their needs. When comparing health insurance plans, remember you don’t need to take a one-size-fits-all approach—offering multiple options can better accommodate your team’s diverse healthcare requirements.
After evaluating coverage options, it’s equally important to understand how to compare health insurance plans’ costs. The cost of the health insurance plans that may best suit your business can vary depending on factors like the size of your company.
For example, under the ACA, businesses with more than 50 full-time employees are required to provide health insurance. Additionally, some states mandate that employers contribute a specific portion of the monthly premiums.
If businesses opt out of providing coverage, they face penalties—but for some, the penalty may be more cost-effective than offering benefits.
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Despite the potential cost, many small businesses recognize the recruiting and retention advantages of offering health insurance benefits. Even when not legally required to subsidize employee health coverage, many employers choose to contribute enough to make it affordable.
If you decide to offer health insurance, consider how much of your employees’ healthcare costs your business can cover.
Keep in mind that premiums on small business health insurance plans are tax-deductible, and businesses with fewer than 25 employees and payroll costs under $50,000 per employee may qualify for tax credits of up to 50% through the federal SHOP marketplace.
These tax credits can make a significant difference in reducing the overall cost of health coverage.
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Including health insurance in your employee benefits package not only gives your business a competitive edge, but it also reduces employee turnover and encourages a healthier workforce.
Taking the time to analyze your options and make informed decisions will ultimately benefit both your business and your employees.
Interested in learning how to compare health insurance plans, but unsure of where to start? A professional employer organization (PEO) like Axcet can help.
For small and mid-sized business owners, PEOs alleviate the burden of having to gather and compare health insurance information from multiple providers.
When you work with a PEO, you don’t need to know everything about how to compare health insurance plans–you can lean on the experts. Schedule a consultation today.
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