Wondering how to choose health insurance for your small business?
Growing and running a small business can be hard. Add the decision of choosing health insurance to the list, and things can quickly get overwhelming. Yet, having an affordable and flexible health plan can go a long way toward helping you retain and attract top talent.
Finding the right plan that balances affordability and coverage with keeping your employees happy and healthy can give you that critical competitive edge.
With so many options, baffling industry jargon and frequent changes to health insurance rules, it can be complicated to choose the right plan for your needs. But there's a way to make your decision easier. The tips in this article will help you better navigate the process to determine the best, most cost-effective coverage for your employees.
Understanding small business health plan options
Finding, selecting and evaluating the best health insurance plans takes time. And as small business owner, time is often a scarce commodity. To help you get to grips with the options fast, here’s a breakdown of some different types of health plans, each with its own benefits.
Fully insured health plans
A fully insured health plan is the most common type of group insurance. If you don’t have a large human resources (HR) team to devote to managing a plan, a fully insured option is often simpler to implement and much more predictable. You pay a fixed premium rate to a health insurance company and they carry the financial risk of insurance claims. They also handle all of the administration and payment of the claims based on the benefits covered, as outlined in your policy. This can be useful when your cash flow is tight because you know exactly what your plan will cost each year.
Because they involve less risk, fully insured plans are a strong choice for many small businesses. And with a fully insured plan from HealthPartners for your small business, you get hassle-free, personalized administration, enrollment, claims processing, reporting and communications support – not to mention award-winning customer experience, a nationwide network and numerous other perks.
Self-funded health plans
With the self-funded route, your organization manages its own health plan.
You won’t pay monthly premiums, but you’ll have to handle the hefty administrative burden of structuring the plan, enrolling employees, processing and paying out claims, and navigating complex legal regulations. And while you’ll save money on premiums, you may lose more money if your employees’ health care costs are higher than expected.
These types of plans work well if you have a steady cash flow, an HR team or third-party administrator with relevant skills and experience, and healthy employees. Basically, the healthier your employees are, the less the plan will cost you. But because of the significant financial risk involved, self-funded plans are typically better suited for large companies with the resources and financial stability to absorb the risk.
Level-funded health plans
A level-funded health plan is a good middle-of-the road option if you have healthy employees, but don’t want to take on the risk or administrative burden of self-funded insurance.
Level-funded is an off-the-shelf form of self-insurance, yet like fully-insured plans, it offers more cash flow certainty. And to limit risk, these plans may offer stop-loss coverage to cap your costs if your employees’ claims exceed a predetermined amount.
HealthPartners level-funded plans give employers stability through a set monthly cost. The cost covers administrative fees, aggregate stop loss premiums and a claims amount based on a worst-case scenario estimate. If your annual claims are lower than the estimate and your employees are healthy, 50 percent of the surplus is returned the following year.
Health reimbursement arrangement (HRA)
HRAs are another form of an employer-funded plan that acts like a savings account for medical costs. It allows you to set aside tax-free funds to help your employees pay for things like health plan deductibles, coinsurance, copayments, out-of-pocket medical expenses and prescriptions.
There are four common types:
- Individual coverage HRA (ICHRA): ICHRAs are available to businesses of any size. Employees are given an allotted amount to purchase their own individual health insurance on healthcare.gov or their state exchange. This approach mitigates risk because you don’t have to purchase stop-loss insurance, and instead you can set a fixed amount for paying claims. There are no contribution limits and you can define your own employee eligibility requirements.
- Qualified small employer HRA (QSEHRA): QSEHRAs are the easiest to implement, but there are limitations. QSEHRAs are only available to employers with fewer than 50 employees. They have monthly caps on reimbursement amounts and come with a strict set of employee eligibility guidelines.
- Group coverage HRA (GCHRA): GCHRAs are often offered alongside a high-deductible group insurance plan. You can structure your own eligibility if your employees are part of your group plan.
- Excepted benefits HRA (EBHRA): EBHRAs provide employees with reimbursement for eligible excepted benefits including vision, dental or short-term disability insurance.
HealthPartners HRAs have flexible claims submission and processing options. Employer contributions are 100% tax deductible, and you’ll have access to online plan management tools to make administration easy.
Health savings account (HSA) and flexible spending account (FSA)
HSAs and FSAs are similar to HRAs in that they allow for pretax money to be set aside for medical expenses, yet they are not insurance plans. Your employees manage the amount of money they want to contribute from their personal paychecks. HSAs are paired with high-deductible health care plans, whereas FSAs are available with lower-deductible plans.
How to find the right plan for your small business
While having many options for health insurance is helpful, finding a plan that is both simple and affordable is what you need to remain competitive.
When considering the different plan types, determining the best health insurance options for your small business and employees isn’t a one-size-fits-all process. It depends on your business needs as well as your employees’ needs and wants. It also requires pinpointing the key health and well-being challenges affecting your workforce.
When choosing the right plan for your small business, consider the following:
Integrated health plans
Plans that combine medical, dental, pharmacy and employee assistance benefits take an integrated approach to health care by pooling data and aligning collaboration between care teams. Integration helps simplify and streamline administration, keeping costs down over the long haul.
It also drives better care outcomes for your employees. Increased collaboration and information sharing ensures that doctors don’t miss an opportunity for an earlier diagnosis. As a result, employees feel more confident in their treatment recommendations.
A healthier workforce is good for business. Healthy employees take less time off and are more productive at work. But not all integrated plans are the same, so it’s important to consider the strengths of each option.
HealthPartners offers a wide range of integrated medical and dental benefits and pharmacy benefits to employers in Iowa, North Dakota, Minnesota, South Dakota, Northeast and Western Wisconsin.
Broad network of primary and specialty care
Your employees want flexibility and convenience in choosing their doctor. HealthPartners plans give them that choice – with large, flexible networks of high-quality, low-cost providers. Telehealth options such as Virtuwell and Doctor on Demand keep treatment costs down while providing quality care from the comfort of their homes.
We have an extensive family of nationally recognized primary and specialty care clinics in Minnesota and Western Wisconsin. In other regions, we partner with trusted local providers such as UnityPoint Health in Iowa, Sanford in North and South Dakota, and Bellin Health and ThedaCare in northeast and central Wisconsin (through Robin with HealthPartners). Our nationwide network covers more than one million providers and more than 6,000 hospitals.
Award-winning health and well-being support
When it comes to driving your plan’s affordability, it’s important to know the big picture and understand your employees’ biggest health issues. A plan isn’t about treating illness, it’s also about promoting health and well-being as well as managing chronic health conditions to prevent them from becoming more serious (and more costly).
That’s why it’s a smart decision to choose a small business health insurance option that gives your employees access to health assessments, well-being and health advocacy resources, and condition management support. These tools will help your bottom line by keeping employees productive, happier and engaged.
They will also guide them through the complexities of health care toward making the best, most-informed decisions.
HealthPartners plans offer a comprehensive set of member tools, resources, digital well-being activities and personalized support options. Whether your employees need an explanation of their plan benefits or claims, help finding a doctor, or support managing specific health conditions, we’re here when they need us. And on the back end, we offer a simple employer experience through easy implementation, plan flexibility and communications support. This approach gives you more time to focus on what you do best – running your business.
How to buy small business health insurance
Whether you’re busy trying to get your startup off the ground or grow your company, figuring out how to buy health insurance is another hurdle to overcome. But it doesn’t have to be. Perhaps it’s your first time offering health insurance too and you’re not sure how to go about it.
That’s why it’s important to partner with a health insurance broker. They do all of the busy work for you. Brokers can help you compare small business health insurance plans to find one that best meets your unique needs. That research can save you time and money, not to mention lead you to the most affordable plan.
As you navigate this process, consider asking your broker about our broad range of small group regional health plans in Minnesota, Wisconsin, Iowa, North Dakota and South Dakota.
We’re here to help small businesses succeed with a healthy and productive workforce.