A Closer Look at the Available Small Business Health Insurance Options

By Jeanette Coleman, SPHR & SHRM-SCP on May 15, 2024
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Demands on small business owners go into overdrive during the year’s last quarter. Not only is it a prime time for preparing tax documents, reviewing sales against annual revenue goals and setting strategy for the coming year, but it’s also the time to evaluate small business health insurance options and offer open enrollment to employees.

If your business is growing, you may have an additional layer of concerns surrounding your benefits offerings. Small business owners and managers considering hiring additional employees in the coming year may find themselves searching for answers as to whether they are eligible for group health insurance.

In this post, I’ll walk you through the various small business health insurance options available to your organization. In the end, you’ll be better prepared to make the right call for your team.

RELATED: Should Your Small Business Offer Health Insurance? >>

What to Know When Choosing Between Small Business Health Insurance Options

Under the Affordable Care Act, companies with 50 or more employees are required to offer their employees access to health insurance. Even though businesses with fewer than 50 employees aren’t held to the same employer mandate, offering health benefits boosts their ability to attract and retain the most talented employees.

In fact, studies show a health insurance package is the benefit candidates desire most when considering an employment offer. Whether your organization is required to offer health insurance or decides to do so for another reason, you have small business health insurance options.

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Small Business Health Insurance Options: Choosing a Vendor

There are three main methods of searching and obtaining benefit offerings for your employees: 

  1. Using the ACA marketplace
  2. Using a health insurance broker
  3. Using a certified professional employer organization

We’ll go through these, one by one, so you can determine which path is right for you when it comes to small business health insurance options.

3 Options for Small Business Health Insurance

1. Using the ACA Marketplace

One of the most well-known small business health insurance options is the Affordable Care Act (ACA) marketplace to source plans for employees.

While both businesses and individuals can access ACA health insurance through the marketplace, small businesses with fewer than 50 employees have access to plans through the Small Business Health Options Program (SHOP), which often allows them to provide access to coverage at lower premium rates. 

To participate in SHOP plan coverage, small businesses must offer health insurance to all of their full-time employees, and at least 70% of their employees must obtain coverage through those ACA offerings.

While the ACA marketplace offers a fairly large selection of plans and allows employers to choose coverage that works for their employees, the SHOP option is not without downsides.

Requirements for SHOP plan participation are often strict, and it can be difficult to navigate compliance in this arena without a dedicated team of HR professionals. 

RELATED: Why You Should Hire a PEO to Save on Health Insurance >>

2. Using a Health Insurance broker 

When looking for small business health insurance options, a health insurance broker is another popular choice. Insurance brokers can help small businesses decipher their options, determine how their employee needs translate in the insurance market and figure out what the best “deal” might be based on the size of their employee pool and other factors.

Because most brokers are not beholden to a limited set of insurers, they can be known to give sound and impartial coverage advice.  

Insurance brokers can help small businesses navigate private plan options with skill, but they can’t always provide their small business clients with the rates that they can access for their larger clients. 

As mentioned, insurance premiums are calculated based on many factors, one of the most significant being the size of the employee pool in question. The more employees there are to be insured in the employee pool, the more competitive rates can be–leaving small businesses that use insurance brokers at a unique disadvantage compared to larger corporations.

While insurance brokers are sometimes able to negotiate lower rates on behalf of their clients, they aren’t able to widen their clients’ employer pool. 

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3. Using a Professional Employer Organization  (PEO)

Using a PEO is another way to source health insurance options for small businesses. For many business owners and managers, the PEO option offers the “best of both worlds” between other available choices. PEOs offer comprehensive support, which, among other things, can include:

  • Tailored Insurance Sourcing

    Helping small businesses source tailored coverage from a wide range of insurance providers.
  • Flexible Employee Insurance Options

    Working with small businesses to offer employees insurance options at varying coverage levels, deductibles and provider network sizes.
  • ACA Compliance Management

    Handling ACA compliance tasks on the small business’ behalf.
  • Dedicated HR Assistance

    Providing small businesses with dedicated HR staff to help navigate health insurance and HR compliance issues proactively and as they arise.
  • Employer of Record Benefits

    Serving as an employer of record for the small business, effectively widening their employee pool and providing access to corresponding lower premium coverage options. 

When you partner with a PEO, you don’t have to sacrifice plan customization, premium rates or ACA compliance. And your employees will thank you.

In fact, according to a study conducted by the National Association of Professional Employer Organizations (NAPEO), employees of firms who partner with PEOs are happier in many categories, including when it comes to their satisfaction with their health benefits. 

RELATED: PEO Health Insurance - A Game-Changer for Small Businesses >>

Axcet HR Solutions: Providing Better Health Insurance Options for Small Businesses

Axcet HR Solutions can provide you with the tailored and dedicated HR expertise you need to help you select the right small business health insurance options for you. As a certified PEO, we can also help you save on those plans and allow you to provide lower premiums to your team members. 

Comparing your options for small business health insurance doesn’t have to be a chore. Let Axcet HR take care of the benefits details, so you can focus on growing and scaling your core business. Interested in learning more about Axcet can help? Schedule a consultation with our experienced consultants today. 

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