Health insurance premiums are starting to climb after years of moderate increases. You’re likely wondering how you can keep your costs under control. If you are a small business owner looking for health insurance, here are five tips to help you get the best price on coverage for your employees.
Health Insurance for Small Business Owners
1: Ask yourself if you are an ALE
If your business is an Applicable Large Employer (ALE), you are probably aware of the implications. However, if your business started small and has grown, you may not know about your ALE responsibilities. Under the Affordable Care Act (ACA), an ALE is any employer with an average of at least 50 full-time employees or “full-time equivalents” (FTE). You must determine your ALE status annually based on the average size of your workforce during the prior year. If you had at least 50 full-time employees, on average last year, your business is most likely an ALE for the current calendar year.
ALE status means your business is subject to the ACA’s employer-shared responsibility provisions. That means offering minimum essential coverage to at least 95% of full-time employees and their dependents. If you don’t offer qualifying coverage, you could be subject to penalties. You must also report your offering to the IRS. For more information, visit the Internal Revenue Service website.
If you are uncertain of your ALE status, CaliforniaChoice offers an ACA Full-Time Equivalent calculator on our website to help you.
2: Consult a broker
Contrary to what you might think, using a health insurance broker does not cost you more. In fact, it could save you money on your group health coverage. Brokers have insight into the most popular plans in your local market. They also know what doctors and hospitals are included in each plan’s provider network. A broker works for you, not the insurance company. The focus is on finding a plan or program that best serves you and the needs of your employees while helping you control costs. A broker can help with your group’s enrollment and provide help throughout the year if there are service or claims-related issues.
3: Compare plan types, copays, and provider networks
There are several types of health plans available. They include HMOs (Health Maintenance Organizations), PPOs (Preferred Provider Organization), EPOs (Exclusive Provider Organizations), and HDHPs (High Deductible Health Plans). Frequently an HMO or EPO is offered with an HSA (Health Savings Account). An HSA is an account that allows employees to set aside money on a pre-tax basis to pay for qualified medical expenses. For more details, visit health care.gov.
Out-of-pocket costs vary by plan type. Most plans do include a deductible that the insured must pay before plan benefits begin. Copays and coinsurance may also apply. For example, if a patient visits an in-network doctor, the copay may be $25, which applies for each office visit. Other plans may have a coinsurance percentage that applies. For example, rather than a copay, the plan may pay 60% of the office visit cost. The insured pays the remaining 40%. When comparing plans, consider all costs: the deductible, copays, coinsurance, and out-of-pocket max.
Each type of health plan offers a different provider network. For HMOs and EPOs, going outside of the provider network for treatment can come at considerable expense. Some plans may offer no out-of-network coverage (except in cases of emergency). That means the insured will likely pay all treatment costs.
HMOs and some EPOs require a Primary Care Physician (PCP) selection by the member. The PCP serves as a gateway for members who need a referral to a specialist. Other EPOs may allow members to self-refer, as long as the specialist is part of the EPO network. PPOs give members the greatest flexibility. Those with PPO coverage can self-refer to any health care provider – in or out of the PPO’s provider network. However, out-of-network care does come with higher copays and coinsurance.
To make sure your preferred doctors are part of the plans you’re considering, you can use online provider directories to look them up. All plans offer directories on their websites. If you use a broker to shop plans, you can ask your broker for help. If you have employees who travel frequently, keep that in mind when selecting coverage.
4: Look beyond benefits
Health plans often offer members added benefits. These can include free or discounted gym memberships, prescription drug savings, and fitness and wellness discounts. Some may offer savings on tickets to movies, sporting events, and entertainment venues.
Other value-adds may include savings on travel, home and office services, food delivery, online learning, and warehouse club memberships. CaliforniaChoice includes a variety of discounts for members as well as access to the Business Solutions Suite, which offers online HR support, a Premium Only Plan (POP), Flexible Spending Accounts for employees, and COBRA billing services. When comparing plans, look at the “total package” to determine the best value.
5: Don’t overlook exchange options
You might consider coverage through a public or private health exchange. The state exchange, Covered California for Small Business, was previously known as the Small Business Health Options Program (SHOP).
The CaliforniaChoice private exchange has been offering group health coverage to California small businesses since 1996. It provides you and your employees with access to eight health plans and 130+ coverage options.
With CaliforniaChoice, you decide what amount you want to contribute to your employees’ health insurance. You can choose a Fixed Percentage (50% to 100%) of a specific plan and/or benefits. Or, you can select a Fixed Dollar Amount for each employee. Your employees then apply your contribution to the health plan and benefits they like best.
You or an employee might choose from several options:
- An HMO plan from Anthem Blue Cross, Health Net, Kaiser Permanente, UnitedHealthcare, or a regional plan like Sharp Health Plan, Sutter Health Plus, or Western Health Advantage
- a PPO plan from Anthem Blue Cross
- an EPO plan from Cigna + Oscar or Anthem Blue Cross
- an HSA-qualified plan
With CaliforniaChoice, it’s the employee’s choice. If the plan an employee prefers costs more than your contribution, the employee pays the difference. It’s that simple.
Learn more about your options
To get more information about health insurance coverage for your employees, request a custom quote from your employee benefits broker. If you don’t have a broker, you can search for one here.