Health Insurance Plans for Small Businesses and Startups
As a small business owner, you may sometimes be indecisive about the choice of insurance for your employees. In the wake of the raging global outbreak called Coronavirus (Covid-19 disease) especially, you may begin to worry about considering a health policy plan so as not to go bankrupt with health checkups and medical bills
Protecting your employee & yourself against Coronavirus
You may also be asking yourself question like if you should offer a health insurance group to your employees or not. There are chances that you want to know what options are available to you if you want to consider a group health plan including associated costs of small business health insurance. If you are the person summarized above, we implore you to continue reading this article as you would have answers to the questions that worry you so much about small business health insurance for startups in a while.
Why you need to offer health insurance as a startup
Let us begin here. If you own a startup firm with less than 50 full-time employees, then your company is probably qualified to offer small business health insurance. This is well not compulsory. However, choosing health insurance for your startup firm can provide value for the firm when the following important reasons are considered;
- Group health insurance coverage in the form of a total compensation package could help you to employ and retain the best employees, particularly if your business belongs in a competitive market
- Group health plans usually offer guaranteed acceptance for you as a business owner, your employees and their families. This could motivate your employees to particularly commit to you.
- As a business owner, health insurance group coverage is actually one of the ways you can implement to edge against price instability.
- Also, when your business enrolls in group health plan coverage, then your business and employees, as well as your families, can be protected under the scheme.
To add to all of the above, you and your employees need extra protection against Coronavirus. Anyone at any time could be infected with the fast-spreading virus. That being said, it will amount to an economically unwise decision to seek medical attention amidst the outbreak or its fears without a health insurance plan. You will go bankrupt!
What are the financial implications of health insurance for startup companies?
This is another important question most startup owners ask themselves in order to decide whether to choose a health insurance plan for their firms or otherwise. What most people forget however is that regardless of the price and financial implications, a well thought of and critically selected health insurance plan is meant to cushion your health expenses and put you on the positive sides with finances especially during a time like this when a pathogenic attack like Coronavirus threatens the world so heavily.
Majorly, the cost of health insurance for startup firms depend on the plan that you and your employee choose. In addition to this, factors such as your business location, employees age as well as coverage and benefits preferences are real factors to consider. While you consider different small business health insurance packages, it is important that you look at the metal levels of each group health plan. These metal levels which are usually represented with gold, silver, bronze, and platinum represent the actuarial values of each health plan. In a nutshell, this refers to the percentage of total average costs that will be paid to you by the health insurance company under the umbrella of the covered benefits.
For example, if your company’s employees have a health plan with 60 percent actuarial value, this means that the health insurance company will pay an average of 60 percent of all covered medical expenses when the need arise while your company will only be responsible for the remaining 40 percent of the medical costs until such employee reached the health plan’s out-of-pocket maximum limit.
For a startup firm, a bronze health plan seems a reasonable choice given its low cost. When you subscribe to this plan, you get to pay low monthly premiums and high annual deductibles. This specifically means that your employees will pay less money per month to be enrolled in this group health plan. The following are the factors to consider when choosing a bronze group health plan;
- The plan could work well if your startup employees are young and relatively healthy. This means that there will be infrequent doctors’ visit and minimal medical expenses. The employees would likely have no need to meet their high annual deductible.
- Similarly, you should ensure that your plan remains affordable for employees who may have chronic health conditions. This is because employees with chronic health conditions with require more frequent doctor visits and prescriptions. To avert high rise in financial implications, you may prefer a plan with lower annual deductible in this situation.
- There is an important need to speak to your startup employees in order to confirm their health insurance preferences, mostly in terms of premiums, deductibles, emergencies and out-of-pocket maximum limits. This is because they could feel inconvenient with your choice if you make this for them. It is their financial decision and they should be allowed to choose what they are comfortable with.
What kind of insurance should you choose for your startup employees?
We discussed how important it is to get a sense of your startup costs preferences for group coverage. After this is done, you must consider the different types of available health insurance plans. You alongside your employees must consider your budget and health care needs (with special references to outbreaks as Coronavirus) to make this critical decision. This is because;
- Your employees may favor a Preferred Partner Organization (PPO) plan over and above the Health Maintenance Organization (HMO) plan. This may happen especially if they do not fancy the chance of seeing a primary care physician before visiting a specialist.
- In contrast, your employees may also prefer an HMO plan over and above the PPO plan because it represents a lower cost. This especially comes from staying in a medical network for services.
Aside from PPO and HMO plans, there are other possible health insurance packages for startup firms with a young and relatively healthy workforce. These plans in their basic and simplistic perspectives prioritize affordability and flexibility. These are;
- Exclusive Provider Organization (EPO) plan. Here, employees are allowed to use all specialists and providers without the need for referrals. There is usually no out-of-network coverage anyway. The plan costs significantly less than HMO and PPO. In fact, it is considered a good choice for startup employees who do not expect much medical care needs and wish to save money.
- Point of Service (POS) Plan. This plan is basically a combination of HMO and PPO plans. Here employees need to work with a primary care physician and should have access to a wide range of health care providers. The plan is advisable only for employees who wish to benefit from access to a wider network of medical care.
- Health Savings Account. This plan is specially designed as a tax-advantaged saving account that employees could use to pay for costs that ensue from high-deductible health plans. The money left over in an employee-owned HAS is usually saved over time and can earn interests. This plan works particularly well for employees who prefer lower premiums.
- Health Reimbursement Arrangements (HRAs). This planning work in a similar way to HSAs. There is however a major difference in the sense that employees do not usually own their HRA accounts.
While these plans have been explicitly stated although briefly, it is advised that small business and startup owners take into account several factors as overall cost, need for medical services and convenience to choose the best and enjoyable plan.
Health Insurance Cost Sharing and Startup Businesses
Group plans are considered largely as employer sponsored health coverage. That being said, it is important that business owners decide how much they will be sharing as part of health insurance costs with their employees. In most States, employers are expected to be responsible for at least 50 percent of monthly employee premiums. This means that they split the cost with their workforce. Then as a startup business owner and employer, you must be aware that you can deduct employee premiums from your federal business taxes. You must be savvy with coverage decision making. This is because it is usually up to you whether your group plan will cover employee dependents or not. However, employees could choose to add dependents to their health insurance plans whether you choose as a business owner to partially pay for dependents costs or otherwise.
You may be qualified for small business health tax credit depending on your number of full-time employees or equivalents including how much they are paid. If you are eligible, congratulations. The tax credit may be able to help your business reduce the costs of offering group health cover to your workforce.
Getting Health Insurance for Your Startup Company
Now that you have understood that choosing a health insurance plan is a step towards saving your business by ensuring maximum protection for your employees amidst the reigning coronavirus outbreak, one question you must be asking like most other startup business owners is how exactly you can get health insurance for your company. Understandably, seeking health insurance for startup firms might be overwhelming. Still, if achieved it can serve as a very valuable investment for your company and employees. It is strongly advised that you consult your tax, accounting and legal advisors instead of relying only on online articles to make a decision. Therefore, for more information about how to implement group health coverage and how to choose the best package for your business and employees, you can contact us at Safe Policies Insurance.