Health insurance can be confusing – to employees and to small business owners and managers. It doesn’t help that there are many prevailing myths and misconceptions swirling around. They vary from what’s covered (or what’s not) to costs, needs, and everything in between. We’re tackling 15 of these myths to help bring clarity to this important, ever-evolving subject.

Coverage-related Myths

1. As a small business owner, I am not required to offer health insurance to my employees.

This can be both false and true – confusing, we know. But the answer depends on your group size. Employers with 50 or more full-time equivalent employees (FTE) are required to provide health insurance benefits. The Affordable Care Act (ACA) says coverage must be affordable. It must provide minimum value to 95% of full-time employees and their children (up to age 26). Full time is defined as employees who work 30 or more hours per week. If an employer fails to offer ACA-compliant coverage, it faces penalties. This is what is referred to as the employer mandate.

Employers with fewer employees are not required to offer employee benefits. There are reasons to offer it anyway. Employee benefits can be a differentiator for your business. Health insurance and other benefits help you attract and keep your best workers. Most employees today expect benefits. If you don’t offer them, you risk higher turnover. That increases your costs because then you’ll have to train new hires to those who leave.

2. If I get coverage through an employer’s health plan, my coverage begins on the first day of my employment.

This, again, may or may not be true. Many employers have a waiting period before benefits begin. Others do not. The ACA says the maximum waiting period is 90 days. It’s always a good idea to ask about the coverage effective date and waiting period. That way, if new hires have coverage, they can weigh the risk of going without insurance or taking advantage of COBRA (if it’s available) until their new coverage begins.

3. I can be denied health insurance because I have a pre-existing, ongoing chronic health condition.

This is not true for ACA-compliant plans. Insurers cannot refuse coverage or charge an applicant more due to a pre-existing health condition. Nor can an insurer deny coverage or charge more for a child with a pre-existing health condition like asthma, diabetes, or cancer.

4. If I have a pre-existing health condition, I will pay more for insurance.

This is also not true for ACA-compliant plans. Insurers are not allowed to charge more based on an individual’s health status or pre-existing health condition. Rates are based on location, age, plan type, and whether dependents are covered. In some states, tobacco use is considered. California and six other jurisdictions prohibit tobacco surcharges.

5. If I need to be hospitalized, my health insurance will cover all of my costs.

Again, not true. Most policies have limitations on what’s covered and what’s not. Some plans are more generous than others. Your plan’s metal tier (Bronze, Silver, Gold, or Platinum) determines what level of costs you will share with your health insurance plan. For example, a Platinum plan pays 90% of the costs for in-network treatment. The plan member pays the other 10% of costs for covered in-network services. For information about ACA Metal Tiers, read our Understanding the ACA Metal Tiers blog post.

6. I am already offering health insurance to my employees. I need to wait until our current plan comes up for renewal before considering a change.

You can shop for insurance for your group at any time. If you are not happy with your current plan, you can change plans when you wish. Making changes could save you money or provide added benefits for your employees. It’s your decision. If you do elect to make a change, be sure your new coverage is in place before canceling your existing plan. You don’t want employees to have any problems with ongoing treatment if your current plan ends. A broker can help you weigh your choices.

7. Individual health plans are cheaper than employer-sponsored coverage.

More than half of Americans get their health insurance through their employer. About 10% have individual health insurance purchased directly. When comparing individual and group plans, look at plan deductibles, co-pays, co-insurance, and out-of-pocket costs. Individual plans often have higher deductibles and greater cost-sharing. The plan type and ACA metal tier also affect pricing. Another consideration is the provider network.

8. My employees can find coverage on their own and it won’t cost my business anything.

Depending on your group size, you may be required to offer group health insurance benefits. Or you may choose to offer them to help you attract and retain employees. While there are costs for coverage, there are also offsets. You can deduct health insurance costs from your business taxes. For more information on the ACA employer mandate (also known as Employer Shared Responsibility Provisions), visit the IRS website.

9. If I offer group health coverage, I have to pay the full cost of coverage.

Untrue. Most group health insurance companies do require the employer to contribute at least half of their employees’ premiums. With CaliforniaChoice, for example, you decide how much you want to contribute. It’s called Defined Contribution. You can contribute a Fixed Percentage (50% to 100%) of a specific plan and/or benefits. Or you can contribute a Fixed Dollar Amount for each employee. (All employees need to receive the same premium subsidy.) Your employees then apply your contribution to the health plan they prefer.

10. If my employees leave my group health plan, they will lose their coverage immediately.

That’s a possibility but not necessarily true for all. Employees may have the option to continue their health coverage at their own expense using Cal-COBRA or COBRA. Depending on how premiums are paid through employee payroll deductions, coverage may continue through the end of the month through which premiums are paid.

11. My employees are mostly young, so they don’t need me to provide health insurance.

You likely don’t know that much about your employees’ health. Some may have pre-existing or chronic health conditions. Your decision to offer health insurance can help provide them with added peace of mind. Remember, too, that health insurance can help if you or an employee need care following an accident. Offering health benefits can also help your business compete more effectively with other employers when recruiting.

Cost-related Myths

12. I cannot afford to offer health insurance to my employees.

That’s often the first response of employers when it comes to health insurance; however, rates vary and are influenced by a variety of factors. It’s wise to ask for a custom quote based on your group, preferred plan type, and ACA metal tier. Because CaliforniaChoice allows you to determine your plan contribution, you may be surprised by its affordability.

13. Health insurance is complicated, and it will require me to invest a lot of time to appropriately consider the options for my group.

We acknowledge that health insurance can sometimes be a challenge. Using a broker will save you time and make it easier for you to evaluate your options. It may also save you money. A broker knows the ins and outs of the available plans. That includes who is part of each provider network.

14. My premium is the only cost about which I need to be concerned.

Premium is certainly a major consideration in reviewing plan options. However, there are other considerations, too. Deductible, co-pays, co-insurance, and total potential out-of-pocket costs are important as well.

15. A low-premium plan is always the best option – for my business and my employees.

Keep in mind that lower-cost plans often have higher co-pays, coinsurance, and out-of-pocket costs. A lower-premium plan may also have a narrow provider network, which affects what doctors and hospitals you can use. It’s important in selecting a plan that you consider all costs – not just the plan premium.

Talk With a Broker

You don’t have to search and compare health insurance for your employees on your own. An employee benefits broker can help you find a plan that addresses employees’ needs while controlling your costs. Ask for a quote for your employees and business. If you don’t have a broker, we make it easy to find one.