man explaining health insurance options to small business owner

Insurance Options for Your Business

The presence of a health insurance plan as a part of a benefits package often weighs heavily in the minds of job candidates, and the quality of the health plan goes a long way in retaining the employees you already have. Navigating the muddy waters of choosing the right one can be tricky but can also go a long way in terms of employee morale.

Provisions in the Affordable Care Act (ACA) require that companies with over 50 full-time employees in the prior year offer a health insurance plan to those employees. Companies below that benchmark can also offer health care as a part of its benefits package. There are programs under the ACA, like the Small Business Health Options Program (SHOP) and a small business health care tax credit, which are designed to encourage smaller businesses to make this possible.

When choosing between different health care plans, first familiarize yourself with the four different types.

HMO

Health maintenance organization (HMO) plans are group health plans in which providers can either work directly for the HMO or be contracted to provide services to the HMO’s members. The differentiating characteristic for HMOs is that members are required to have a primary care provider who must write a referral for visits to specialized doctors, like psychologists or endocrinologists.

PPO

Preferred provider organizations (PPO) have a network of providers that they work with and that members can take advantage of. While a co-pay is required for these visits, it’s cheaper than being responsible for the entire bill, which is what often happens when members seek care from physicians outside of the network. These payments can be reimbursed through the insurance provider but often at a greater cost, further encouraging members to operate within the network.

PSO

A hybrid of HMOs and PPOs, point of service organizations (PSO) have a network of providers that members can seek care from without a referral from their primary care provider. Members can also see physicians outside of the network but will likely pay more.

HDHP

High deductible health plans (HDHP) are the most affordable solution for employers, but also have higher out-of-pocket maximums and annual deductibles for employees. Based on which HDHP you choose, members may have the option of choosing in-network or out-of-network providers, although in-network providers are cheaper.

Other Options

For companies of less than 50 employees that don’t offer a health plan, the Qualified Small Employer Health Care Reimbursement Arrangement (QSEHRA) may be suitable. Under this program, the company makes contributions to an HRA which employees can submit reimbursementsto.

Qualified high deductible health plans arerequired to provide employees with health savings accounts (HSA). They also must meet IRS regulations in terms of coverage, annual deductible and annual out-of-pocket costs.

You may also want to partner directly with a healthcare provider through an association health plan (AHP) but there are strict rules and guidelines in place for this type of health plan. Make sure to evaluate state regulations and the plan structure to be sure that this option is best for your employees.