When you’re starting off as a new small business, you can face a lot of potential stresses in providing employee benefits while on a tight budget. One of the most important employee benefits you can offer is health insurance, so that your employees can feel protected and covered for their medical needs. However, there are many types of small business health insurance that you have to choose from depending on the size of your company. You may find yourself stuck between small business/group insurance and individual/family insurance, depending on the specific needs of your employees and coworkers. Here are the differences between the different types of small business health insurance:
Before learning about the four main types of small business health insurance, we should first clarify the difference between individual/family plans and small business/group health plans. Individual and family health insurance plans can be purchased by an individual for their unique needs. It’s generally simple to apply for and enroll in health insurance nowadays if you are married, have a child or have moved to a new coverage area. This is probably the best insurance for your small business if you have less than five employees.
On the other hand, small business or group health insurance plans are much more suitable for companies consisting of 10-25 people. This employer-sponsored health insurance extends coverage to the employer’s dependents and is ideal for self-employed people or people working together as a small group. Furthermore, both of these health insurances are offered in four main types:,HMO, PPO, EPO, and HSA-eligible.
HMO, or Health Maintenance Organization, which is a type of small business health insurance that requires their members to choose a primary care physician that will provide the majority of their health care services. Outside of these HMO primary care physicians, most health care is not covered by HMO. This plan is best for those who are willing to work within the limitations of their health insurance provider and want to pay a low monthly rate.
PPO, also known as Preferred Provider Organization is very similar to HMO’s in the way that they have a list of providers for you to choose to get your health care services from. If you abide by their lists, they will cover the highest amount possible which is convenient for those on a tight budget. However, another benefit of PPO plans is that they may cover a lesser amount if you pick a provider that is not on their prefered list. This plan is more lenient with what providers you can choose from than HMO plans, and providing your employees that freedom may be best for your business.
EPO plans, or Exclusive Provider Organization plans, are much more restrictive than both HMO and PPO plans. These types of small business health insurance plans, as the name suggests, has an even more exclusive list of health care providers you can receive covered insurance from. EPO plans are more likely to cover your expenses in the case of an emergency, but outside of those circumstances, they are not likely to cover any services outside of your given network. EPO plans are also great for small businesses because they do not require you to pick a primary care doctor. For a company of employees that are not looking to coordinate their medical plans through any single primary care doctor, this plan certainly has its perks.
You can consider HSA-Eligible plans, meaning Health Savings Account, to be similar to PPO plans but with a higher deductible. This is a unique type of bank account that allows its members to save their money on a tax deductible basis that can be applied to their medical expenses later on. This money is also capable of rolling over each year and earning interest. HSA-eligible plans paired with high deductibles can help your employees save cash on their health care and provides them with a tax write-off. The only downside to this insurance plan is that you have an annual limit on your deductible. This plan best suits those who are young, healthy, and not expecting many medical expenses throughout the year. It also benefits those looking to pay a low monthly premium which can be great for those who are just starting a business and need to save as much money as they can.
Any new business owner knows how difficult it can be to get a handle on your accounting and taxes during the first few years in business. Keeping up to date with new Arizona tax laws, minimum wage laws, and developing a payroll system can be a complicated process to establish. Working with PayTech makes managing your business easy, because our team members will help keep your professional data documented and organized. PayTech’s monthly services in HR support, payroll, and accounting will ensure that the details of your business are well kept while you focus on its growth. Consult one of our team members about the best types of small business health insurance to get your employees the right coverage by contacting us.
