Choosing the right health insurance for your employees is a pivotal decision that not only impacts their well-being but also influences your business’s attractiveness as an employer. This decision can seem daunting, given the myriad of options available and the implications of cost versus coverage.
The Basics of Small Business Health Insurance
Before we dig into the process of choosing the right plan and some of the things to avoid when evaluating plans, let’s make sure we’re on the same page regarding different terms and concepts. Here are a few of the basics:
- Premiums: This is the amount you pay to the insurance company, usually on a monthly basis, to maintain your coverage.
- Deductibles: The deductible is the amount the insured person has to pay out-of-pocket for covered services before the insurance company starts to pay.
- Co-payment (or co-pay): This is a fixed amount that the insured person pays for a covered health care service after they’ve paid their deductible.
- Co-insurance: Unlike co-payments, which are flat fees, co-insurance is a percentage of the cost of a covered health care service that the insured person pays after they’ve paid their deductible.
- Out-of-pocket maximum: This is the most an insured person will have to pay for covered services in a policy period (usually a year). After reaching this limit, the insurance company will pay 100% of the costs for covered benefits.
When it comes to different types of health insurance plans, you’ll want to be aware of the differences between:
- Health maintenance organization (HMO): With an HMO, employees are limited to getting coverage for care from doctors who work within that specific HMO network. Out-of-network care isn’t usually covered unless it’s a qualifying emergency situation.
- Preferred provider organization (PPO): With a PPO, the insured pays less when they use providers that are inside of the company’s network. They can use other hospitals and doctors, but they come at an additional cost.
- Exclusive provider organization (EPO): This is a combination of both HMO and PPO plans. Depending on how the program is set up, costs vary based on whether the healthcare professional is within the insurance company’s network.
- Health savings account (HSA): An HSA is not insurance. It’s a tax-favored account that allows you to set aside money for health expenses. You also have high deductible health plans (HDHPs), which are often combined with HSAs to provide as much coverage as possible.
Tips for Selecting the Right Plan
The first step in choosing a health insurance plan for your employees is to determine your budget. You need to decide how much your company can afford to contribute towards premiums without impacting the financial stability of the business. It’s important to balance affordability with quality; while you may want to cut costs, remember that offering substandard health insurance can demotivate employees and lead to higher turnover rates.
The next step is to consider the needs of your employees. If you have a demographic that’s very young and healthy, you might not need extremely comprehensive coverage. Instead, preventive care and mental health services might be desirable. On the flip side, if you have an aging workforce, you’ll need much more comprehensive care. And if you have many young mothers having children, they may appreciate good OB and pediatric care along with robust maternity coverage.
Realistically, you should also pay attention to what your competitors are offering. This doesn’t mean you need to copy their plans, but you should be aware of them. This helps you know what you’re up against. At the very least, you should try to offer comparable care. However, it’s even better if you can find a way to offer benefits they don’t currently give their employees.
Also, be mindful of how you’re finding your plans.
“Purchasing small business group health insurance from a professional advisor is the best way to compare plans,” HSA for America explains. “There are thousands of different medical, dental, and vision plans on the market. Sorting through them by yourself is not an easy task.”
A good health advisor is a no-brainer. In most cases, it doesn’t even cost you anything. They get paid and incentivized when they refer you to specific providers. (With that being said, work with an independent broker who can select any plan for you. Don’t choose a captive advisor who only offers one network’s plans.)
Pitfalls to Avoid
The last thing you want to do is get stuck choosing a plan based on premiums alone. You also can’t afford to overlook specific employee needs. And when it comes to provider networks, do your research on the quality of care! More specifically:
- Consider the entire package: Rather than focusing solely on premiums, look at the entire package the plan offers. This includes deductibles, out-of-pocket maximums, co-pays, and the network of providers.
- Involve employees in the process: To ensure that the plan meets your employees’ needs, involve them in the decision process. Collect their feedback on their needs and preferences.
- Research the network: Look into the quality and accessibility of the providers within the plan’s network. If a significant portion of your employees live in a specific area, ensure there are network providers conveniently located near them.
Putting it All Together
Building a solid health insurance offering for your employees is one of the best things you can do to attract and retain top talent. It also makes a difference in their overall productivity and job satisfaction. By taking your time to carefully consider all options, you’ll set yourself up for success.