You have many choices if you are considering a health savings plan or health insurance policy. Determining which type is the right fit for your employees will depend on their unique financial, health, and family needs. If you are a business considering offering this type of benefit, you will need to think from your average employee’s perspective. Which plan would be the most beneficial for your employees and also be workable from a business standpoint as well? Before jumping into acquiring health insurance for your employees, having a basic understanding of common health insurance plans is a recommended first step.
Small Business Health Insurance: An Overview
Small businesses do not always have to offer health insurance under current laws, but many businesses will be required to do so. If you are unsure of the requirements you have to satisfy as a business owner, contact the Business Benefits Group to learn more about our benefits consulting services. There are many advantages to offering health insurance to your employees, making it a strategic business decision that you shouldn’t ignore. Here are some key advantages at a glance:
- Recruiting higher quality employees, including those who are looking for an employer that offers health insurance.
- Promoting the health of your employees.
- Arranging for coverage for yourself as a business owner and your family.
- Taking advantage of tax benefits.
- The potential to increase profits because you have more productive and healthy employees.
It should be noted that these are advantages that will hold true across most businesses. However, there is much more detailed and nuanced information regarding the positives of offering health insurance that business owners should explore before making any major decisions.
Major Categories of Health Insurance Plans
There are two major types of health insurance that business can offer: group plans or individual plans. Group plans are purchased by the employer and then offered to the employee. This is likely the most well-known type of insurance plan. Under this type of plan, the employee and the employer split the cost of the monthly premium.
The other kind of plan is individual health insurance. Under this type of structure the employee pays for insurance coverage themselves, and then the employer can choose to reimburse the employee for the premium or a portion of the premium. Many small businesses elect this option because it can be more cost effective.
Types of Health Insurance Plans
Within these two overarching categories, there are also several types of plans available. Each one has its own structure and accompanying advantages and disadvantages. Finding the right plan for your business may require digging deep into the details of each type of plan.
PPO (Preferred Provider Organization) Plans
This is likely the most common type of plan available. Employees who use a PPO plan must receive their medical care from predesignated doctors or hospitals. It could also be within a specific geographic region, or it could even be within one company.
The insurance plan will outline a list of preferred providers. In some cases, the individual under the plan can go outside these providers, but the cost of services will likely increase or the services may not be covered at all.
HMO (Health Maintenance Organization) Plans
Under this type of plan, the employee can choose from a network of providers. These providers generally contract exclusively with a specific plan. The employee will usually select a primary care physician (“PCP”), and the PCP can refer to them to specialists if needed.
HSA (Health Savings Accounts)
A health savings account is usually an option that is added on to a PPO plan. It acts as a designated health-related expenses bank account that employees can deposit money into and withdraw funds for medical care. HSAs allow for employees to input pre-tax dollars specifically for future medical expenses.
HRA (Health Reimbursement Arrangements)
An HRA acts a lot like a HSA. It is usually also connected to a health plan. However, the major difference is that instead of the employee putting money into the account, the employer will deposit funds. Additionally, the employer actually owns the account. The account is then used to reimburse the employee for their health related expenses and health insurance premiums. Like the HSA, it also has tax advantages, but they are directed more towards the employer rather than the employee.
FSA (Flexible Spending Accounts)
These accounts allow employees to save money for healthcare expenses without being tied to a specific healthcare plan. The employer maintains ownership of the account, but the employee contributes their own money. The employer can also choose to contribute additional sums. Like some of the previously mentioned plans, there are tax advantages with this type of account as well. However with FSA accounts, these advantages may apply to both the employer and the employee.
Contact BBG For More Information
There are many choices when it comes to selecting the best health insurance options for your team. The right program for your business is out there and BBG can help you decide which type of plan offers the perfect fit for your business. To learn more about what options are available to you, please call or contact the Business Benefits Group online for more information on our professional consulting services.