How to Get the Best Health Insurance for Your Small Business: An Affordable Approach

Small businesses have a level of complexity that larger companies don’t. That’s because with so much on your plate, it can be easy to overlook the little things until they become big things in terms of your business. But the good news is, there are some small changes you can make that have a big impact. For example, getting health insurance for your small business isn’t nearly as difficult as you might think it is. If you take the right precautions and get smart about what kind of coverage you need and how much it costs, that can be one of the most affordable additions to your company budget. Let’s take a look at how to get the best health insurance for your small business: an affordable approach.

What Is the Benefit of Small Business Health Insurance?

The benefit of small business health insurance is the peace of mind it brings. Health insurance is a financial safety net that covers medical expenses that may occur during a claim. This peace of mind is especially valuable if a business owner is self-employed and may not have access to health insurance through their job or through a spouse’s employer. This peace of mind is essential for business owners who may have a tendency to overextend their personal finances to ensure their business is covered.

Why Is Health Insurance So Important to a Small Business?

Health insurance is important for a small business because it’s a way to protect your company from financial ruin if an employee goes through a medical crisis and has to miss work. For example, if a receptionist has appendicitis that requires surgery, she can’t be at the office for a few weeks. That’s when most companies are at a loss — they don’t have coverage for this type of situation.

Which Small Business Health Insurance Options Are Available?

At the most basic level, there are two types of health insurance available for small businesses: health plans and indemnity plans. While they are similar, they are also very different. Health plans, also known as HRAs, are what you’d expect — a type of health insurance that protects you and your employees with the promise of a specific level of benefits should a medical expense arise. The caveat is that the cost of this plan is based on a percentage of your employees’ wages. Typically, the amount is deducted from each employee’s pay before it’s reported to the IRS — meaning you’ll never know how much you’re paying for health insurance.

Additionally, these plans have a high administrative cost and can be complicated to navigate. The result is that they may not be the best option for your company. An indemnity plan is different in that it is, essentially, a contract between the employer and the insurance company. The agreement is that in the event of a medical expense, the insurance company pays the benefit. While indemnity plans can be more expensive than other options, they eliminate the risk for both the employer and the insurance company. For this reason, they are usually only offered to large companies.

Figuring Out How Much Coverage You Need

If you have employees, you will need health insurance. But just how much coverage do you need? To determine that, you need to know how many people are on your health plan and how much they earn. Next, you’ll want to determine how much your medical expenses are. If you have a large number of employees, you might have some higher expenses that you can use to compare your costs. With those numbers, you can figure out what percentage of your costs you want to cover. If your employees have a median salary of $50,000 per year and you’ve had average medical expenses of $5,000 per person, you’d want to cover 75 percent of their medical expenses.

Finding the Right Provider

Finding the right health insurance provider for your business can be tricky. You want a provider that offers affordable coverage. You also want one that covers your geographic area and offers a large network of doctors and hospitals. The easiest way to find a plan with these features is to shop around at health insurance brokers. These companies have access to the best plans from a variety of different providers. So you can compare prices and ease-of-use amongst a large number of plans. While you’re shopping, make sure to ask about the providers’ underwriting guidelines. Generally speaking, you don’t want to sign up for a plan that’s going to reject your application simply because you have a small business.

The Bottom Line

Health insurance for a small business can be a challenge, but there are ways to make it more affordable and even more affordable. Health insurance brokers can help you find an affordable plan, and you can make sure to apply for a plan that’s right for your small business by checking underwriting guidelines. With these tips in mind, you’ll be able to get the health insurance coverage you need and afford.