Wellthie’s Definitive Guide to Small Business Health Insurance

By Angela Sluss

This Small Business Saturday and always, Wellthie wants you to provide access to health benefits for your small business employees. Wellthie’s definitive guide has valuable information to help you navigate the small business health insurance space.

What Kind of Small Business Are You? 

Your business is considered a small business in the majority of states if you have fewer than 50 Full-Time Employees (FTEs). If you are located in New York, Vermont, Colorado, or California you would be considered a small business if you had fewer than 100 FTEs. 

If you are a Contractor, Sole Proprietor, or Freelancer, with no other employees, you may be eligible for Individual Medical plans and possibly Association Health Plans

If your business is over the above thresholds, you would be required by the Affordable Care Act (ACA) to offer health insurance. 

Why Offer Health Insurance? 

There are countless reasons to offer health insurance options to your employees, ranging from ACA requirements to the health, wellness, happiness, and productivity of your team. You should prioritize making health coverage available for your employees even if you are not obligated by law to do so. Budgeting for the sake of your employees’ well-being is proven to produce healthier, more motivated workers and to both attract and retain the best talent for your company. Metlife’s 2019 report on Employee Benefits Trends found that 76% of employees agreed that “employers have a responsibility for the health and well-being of their employees.” Demonstrating your investment to your employees by providing them with health benefits choices rewards you with “a more engaged, loyal, and productive workforce in return.”

Can I Afford It? 

A limited budget can seem like a considerable barrier preventing you from deciding to offer medical insurance to your employees. For businesses under the 50 life threshold, Fully Insured ACA rates are determined based on your employees’ ages, the location of your business, the carrier, and the type of plan. Your employees’ health insurance rates will not vary based on their health or pre-existing medical conditions as per the ACA regulations.

You need to understand the amount of money that you can allocate towards benefits (don’t forget to account for the cost of adding employees if growth is in your plan for the year). 

You will need the dates of birth of your employees and their dependents (spouses and children).

Online national small business health insurance marketplaces like Wellthie are great ways to shop and compare your employees’ health insurance costs and options. Simply plug in your company’s ZIP code and immediately see the number of plans available in your area, at the lowest average employee only cost for a 35-year-old.

If you enter specific ZIP codes on Wellthie’s platform, you can view and compare typical small business health insurance prices between the locations. For this example, let’s focus on the following cities: Phoenix, AZ, Atlanta, GA, Detroit, MI, Denver, CO, Jersey City, NJ, and New York City, NY.

As you can see, the price based on your location can vary widely. The most expensive area in this example is New York City, NY (10019) while the least expensive is Detroit, Michigan (48204). 

The numbers above include the assumption that you are covering 100% of your employee’s monthly cost, but that is not always required. Small business owners will commonly contribute at least 50% of the total costs of their employees’ monthly health insurance premiums. Carriers may have certain requirements around contributions based on your size. 

What Options Are Available?

Fully-Insured Plans

Fully-insured plans are employer-sponsored health plans where your company pays the insurance carrier a premium. You can more easily budget for fully-insured plans because the prices are based on the ages of your employees and/or the zip code of your company headquarters. The health of your employees doesn’t impact the rates, and you cannot be denied based on your employees’ health. The insurance company assumes all risk, and the insurance provider manages all claims.

You traditionally have more options when it comes to plans or carrier choice, and can normally purchase a fully-insured plan if your business has at least two employees.

It does differ from other alternatives in that fully insured plans do not offer any assistance with payroll, HR, or compliance. 

Professional Employer Organizations (PEO) 

Professional Employer Organizations (PEOs) offer services providing support and workplace insurance coverage, payroll processing, benefits administration, and HR training to small and medium-sized businesses.

The services PEOs offer to small business employees go beyond health benefits. PEOs provide payroll, workers’ compensation, compliance support, and human resources services.

PEOs offer minimal choice in carriers, which means your employees may not have the option to enroll in the best health plans for them and their families. PEOs require monthly administrative fees to support their services and may require additional information in order to finalize a quote option.

Association Health Plans (AHP)

Association Health Plans (AHPs) allow small businesses to join together to offer large group coverage. For certain companies, AHPs can be affordable alternatives to more traditional health care plans. AHPs cannot discriminate against individuals based on any previous health conditions or how old they are. In addition, there is no limit (annual or lifetime) on health coverage. 

Depending on the industry, AHPs can be more expensive, and the plan rates may vary based on age, and gender within a specific geographical location.

Self-Funded Plans

Self-Funded Plans or Self-Insured Plans are health plans where the employer assumes the risk of paying health claims as opposed to the insurer. Self-Funded Plans can be affordable options because there are no risk or profit margins to pay to an insurer, in addition to no state-levied premium taxes. Self-Funded Plans provide control to the employer, including the freedom to customize plans to fit the company’s personal goals and the needs of the employees. The employer can select, coordinate, and monitor all plan vendors and retain funds should a health claim be lower than expected. Additional information may also be required to obtain a quote including health information of your employees. 

The employer risks financial losses in the cases of higher claims, operational inefficiencies, unpredictable current year expenses, regulatory penalties or lawsuits, in-house fraud, or abuse. 

 Where Do I Begin to Research Options* in My Area?

– National small business health insurance marketplaces like Wellthie

SHOP 

– Insurance carriers in your area

– Ask other small businesses for licensed health insurance broker references

*All of the options above are free to you – you should never pay for advice

What Are the Differences in the Plans?  

Fully Insured small group plans are separated into 4 metallic tiers: Bronze, Silver, Gold, and Platinum. Bronze is usually the cheapest, and the premiums go up from there. 

A network refers to the suppliers, facilities, and providers your employees’ health plan or insurer has contracted with to provide health care services.

There is a variety of plan types available, including Preferred Provider Organizations (PPOs), Exclusive Provider Organizations (EPOs), Point of Service (POS), and Health Maintenance Organizations (HMO).

What’s a Good Plan? 

A good plan is defined differently by every company, set of employees, budget, and the health needs of the given employee population. Wellthie is an excellent tool to browse your employees’ fully insured small group health insurance costs and options, generate quotes, and then schedule an appointment with a licensed health insurance broker at your convenience. You have many different options when it comes to affording small group medical insurance. As a reminder, you may not have to contribute the full amount towards employees’ premiums. 

Ultimately the best option is the plan you can afford that provides sufficient coverage for your employee population. 

There are plenty of options available for you and your employees if traditional insurance plans are too expensive. We’ve outlined several other options for you above, but reach out to an expert who can guide you to the right choice for your small business.

Other Considerations (Options)

Health Savings Accounts

Health Savings Account, or HSAs, provide tax advantages that can be used as payment for healthcare expenses. If you’re a small business owner looking to shop and find an HSA to use in conjunction with your qualifying High Deductible Health Plan (HDHP), consider opening an account with Lively.

Health Reimbursement Arrangement

Health Reimbursement Arrangements, or HRAs, are accounts funded by employers like you in order to help your employees pay for qualified medical expenses that are not covered by their health plans. If you’re a small business owner looking to shop and find an HRA to offer your employees in conjunction with a small group plan, consider signing up with Take Command Health. There are a lot of new HRA options available. Some of those are listed below:

Individual Coverage Health Reimbursement Arrangement 

– Individual Coverage Health Reimbursement Arrangement, or ICHRA, is based on reimbursing employees for insurance rather than buying it for them. Employers design their plan, including establishing reimbursement limits and defining which employees are eligible. Employees can be divided by classes (full time, seasonal, part-time, salaried vs. non-salaried, etc.) and each class can be extended a different level of benefit—varying reimbursement amounts or even in combination with a group plan.

– Employees purchase the individual plans they want.

– Employees submit claims for reimbursement.

– Employers reimburse employees for valid claims.

Qualified Small Employer Health Reimbursement Arrangement 

– Qualified Small Employer Health Reimbursement Arrangement, or QSEHRA, allows small employers to set aside a fixed amount of money each month that employees can use to purchase individual health insurance or use on medical expenses, tax-free. 

– Employers design their plan and set reimbursement allowances.

– Employees pay for their own health insurance and medical bills.

– Employees provide proof of their expenses.

– Employers reimburse the employee up to the set limit.

Supplemental Insurance

Supplemental insurance products are additional coverage that you can use to help with the out-of-pocket expenses that may not be covered by your employees’ major medical insurance, such as serious illnesses or accidents. These types of voluntary insurance would pay a cash benefit if one or more of your employees receive a specific diagnosis or had a hospital stay. If you’re a small business owner interested in securing extra financial protection for your employees, consider visiting Aflac.

Start Offering Benefits Today

If you’re a small business owner considering making health insurance options available to your employees, there is an abundance of resources at your disposal guiding you every step of the way. Don’t wait! Make sure your valued team members are covered!