Health Insurance for Employees: 9 Questions Small Businesses Are Asking
Health insurance can be complicated. That’s especially true for a small business owner if you’re just starting to think about adding health insurance for your employees. Below are some of the most-frequently asked questions that small businesses are asking when starting to consider health insurance for employees. Hopefully, these will help you, too.
Q1. Do I have to offer health insurance for my employees?
Maybe. The Affordable Care Act (ACA) requires businesses with over 50 full-time employees to offer health insurance benefits. If your business has fewer than 50 employees, then it is not mandated that you offer benefits. However, many businesses with fewer than 50 employees in California still offer health insurance benefits – they’re a great way to attract talented employees!
IMPORTANT: the definition of a full-time employee by the ACA is someone who works 30 hours a week, but it’s a bit more complicated than it seems. The ACA offers a calculation to determine how large your business is, which is why you should connect with a health insurance broker to determine whether your business is officially considered a large business (50 employees or more).
Q2. How much is employee health insurance going to cost ME?
The amount you spend on your employees’ health coverage is up to you. Working with your broker, you have the ability to set the amount you want to spend.
You can choose a fixed dollar amount or a fixed percent of the costs – for example, 50% of the lowest-cost plan. That means, if you’re offering multiple options to choose from and the least expensive option has a premium of $100 per month, you must contribute $50 per employee per month. And the premium amount you decide to contribute toward employee benefits is locked in for 12 months.
Q3. How much will insurance cost MY EMPLOYEES?
Your employees will use the amount you contribute to their benefits. In a program like CaliforniaChoice, employees have a big selection of different health insurance carriers and plan options to choose from. If employees select an option that costs more than your contribution, they simply pays the difference. Think of it like this: you’re basically giving each of your employees a health care voucher to use at a health insurance mall. They use your voucher on the option they like best!
Q4. Do I have to pay when my employees go to the doctor?
No. This is a common misconception for employers purchasing health insurance for the first time. As the business owner, you are only responsible for paying the amount you and your broker determine to be your “contribution” toward employee benefits. So, if your contribution is $50 per employee and you have 10 employees, your monthly premium is $500 – that’s it.
When your employees visit the doctor, they are responsible for the costs associated with the health insurance plan benefits they select.
Q5. What are the basic differences between an HMO, PPO, EPO, and HSA-qualified plans? What are the pros and cons of each?
There are a number of different health insurance plans to choose from, but HMOs, PPOs, EPOs, and HSA-qualified plans are some of the most common. Let’s take a look:
HMO is the short-hand reference to a health maintenance organization. An HMO provides health care through a network of physicians, hospitals, and other health care providers contracted directly with the HMO. Most often, with an HMO, a member has a Primary Care Physician who acts as the first source of contact for treatment and referrals. Other than for emergency care, if you see a health care professional outside of the HMO’s network or without prior authorization from a Primary Care Physician, treatment may not be covered.
PPO refers to a Preferred Provider Organization, which also operates through a network of participating doctors, medical groups, hospitals, and specialty facilities. PPOs typically cost more than HMOs, but they offer more flexibility when members seek treatment, and they have fewer restrictions when it comes to using out-of-network providers. (PPOs pay more if you go “in network” but also allow benefits for your out-of-network health care.)
An EPO – or Exclusive Provider Organization – is similar to an HMO. It provides benefits only if care is rendered by a health care provider within a specific network. (This exclusivity provision may be waived for emergency situations.)
HSA: If you choose a High Deductible Health Plan, you may also want to give your employees an option to fund a Health Savings Account. This gives them the ability to pay for qualified health care-related expenses with tax-free dollars before their health plan kicks in and begins to pay for care.
A big advantage in offering the CaliforniaChoice multi-carrier private exchange to employees is access to multiple HMO, EPO, PPO, and HSA-qualified plans. This allows them to pick the coverage that’s right for their individual or family health care needs and budget. One employee might pick a PPO because it includes his or her preferred doctor or hospital in the health plan network, while another employee who rarely visits the doctor might choose an HMO. A third employee might choose an HSA-compatible plan because of its cost and tax advantages. Whatever your employees’ needs may be, it’s their choice!
Q6. Do I pay more if I use a broker than if I go directly to an insurance plan?
Absolutely not. Contrary to what you might think, using a health insurance broker doesn’t cost you anything. In fact, you could actually save money because an experienced broker will have the expertise and technology to help you find the most competitive benefits for your company, while also ensuring you and your employees have access to the doctors, hospitals, and other health care providers you want. Brokers are paid a commission for the products they sell, so you won’t pay an added fee for using a broker.
Q7. Can I get health insurance for myself only?
Coverage is available from some health plans for owner-only, sole proprietorships, and husband-wife groups. Ask your broker for details.
Q8. Who do I work with to look at my health insurance options?
Because of the complexity of health insurance, many employers find it advantageous to shop for employee benefits with help from an employee benefits broker. An experienced broker can offer you professional counsel at no cost to you. He or she will answer your questions, discuss the advantages offered by Defined Contribution, and help you make sense of the jargon that’s common in the health and insurance industry.
An independent broker is just that, independent; you can expect him or her to work with you to find you the best-available plan for your organization, your employees, and your budget. And, a broker can help you evaluate “extras” that might be available, such as optional coverage (like Dental or Vision), online enrollment, or other services (like a Flexible Spending Account, Premium Only/Section 125 Plan, COBRA services, etc.).
Don’t forget, in general, expenses you incur for employee health benefits are 100% tax deductible as ordinary business expenses on both your state and federal income taxes.
Q9. How can I get started?
If you want to get a quote for employee benefits for your business, you can begin by providing your broker with a current employee census. Quotes are based on each employee’s actual age, so your census should list all persons to be covered and their individual dates of birth. This will ensure a more accurate quote. Your broker will also ask you to complete some other forms and agree to a 50% contribution for each employee’s coverage. Then he or she will work with you to schedule an employee meeting or online enrollment, so each employee can sign up for their preferred coverage.
If you don’t already have an employee benefits broker, we can help you find a CaliforniaChoice broker to speak with about a quote for your business. CaliforniaChoice offers health insurance coverage from seven of the state’s leading health insurance carriers.