Fast Facts About Small Business Health Insurance

January 1, 2010

  • The most significant difference between individual health insurance and group health insurance for a small business is that group insurance is guaranteed to be issued regardless of the health of the employee.
  • Group insurance is also more likely to include "mandated benefits" like maternity benefits and mental health coverage that are usually optional in individual health insurance.
  • The cost of the "guarantee issue" and "mandated benefits" is substantial so group insurance is almost always more expensive than individual insurance.
  • Some states restrict small businesses from offering less expensive individual insurance to employees.
  • The least expensive group health insurance for small businesses is the Basic Health Insurance plan at www.BasicHealthInsurance.net that provides limited coverage. 
  • In most states, eligibility for group health insurance is determined by examining the employer's quarterly unemployment tax return.  Owners not listed on the return are eligible as long as at least one eligible employee is listed on the unemployment tax return.  This rule deliberately excludes many one person businesses and businesses where a husband and wife are the only employees.
  • The most effective way for one person businesses to control health care costs is to utilize a Health Savings Account.  See www.HealthSavingsAccount-HSA.com for more information.
  • The most efficient way for an employer to control the cost of employees' health insurance is to offer the coverage inside of a "Health Reimbursement Arrangement".  See www.FreedomBenefits.org for more information.
  • Full time employees are usually eligible for group health insurance whereas part time employees are usually not eligible.  The determining factor is a statement from the employer stating whether the employee works more or less than 30 hours per week.
  • States regulate the price of small business health insurance so that one small business with unhealthy employees cannot pay many times more than a business with healthy employees.  Generally the most an insurer can charge a business with high health risks is 167% of the standard rate.
  • Offering more choices within the health insurance generally increases the probability that employees will get the most from their health plan. 
  • www.FreedomBenefits.org offers a low priced service to help find, compare, install and run a small business benefit plan.

reposted from MedSave.com

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