The true cost of small business health insurance should be measured not just in money, but also in time and effort.
If as a business owner, you’re bearing part of the premium cost, then you’ll definitely have to take that cost into consideration. In addition, there’s also the time and effort involved in searching for a suitable plan that matches your business’s needs, creating awareness among your employees about the plan, and the administrative tasks that follow after deciding on a plan.
Let’s take a look at the following in detail.
1. Monetary Costs
The monetary cost involved in providing small business health insurance is largely proportionate to the percentage of the premium that you, as the employer is going to bear. In addition, the premium also depends on the people you’re covering (just employees or including dependents) as well as the scope of benefits that you’re providing.
The best manner of budgeting these costs can be either as a percentage of the payroll or as a per-employee cost on a monthly basis. The good news is that if you utilize the services of an insurance broker, you usually do not pay any more money for their services. They are compensated by the carriers directly and in most states the premiums are the same whether you use a broker or not.
2. Time and Effort
With myriad options available, scouting for, analyzing and choosing the most suitable small business health insurance plan requires considerable effort.
You’ll have to devote considerable time and energy searching for providers, analyzing plans, talking to employees about their needs, filling out paperwork as well as consulting fellow entrepreneurs or health insurance experts.
Even after enrolling for a group insurance plan, you’ll need to revisit your health insurance plan periodically for enrolling new joinees and to ensure that it’s properly monitored on an ongoing basis.
3. Information Requirements
Offering business health insurance isn’t required by law for those businesses with between 2 to 50 full-time employees (or equivalent based on man-hours), but it can bring you several benefits and advantages.
Here are a few things you’ll want to keep in mind in your search for small business health insurance.
Business Name and Details (SIC code, Duration etc.)
Business Address (a street address, not just a P.O. box)
Tax ID / Employer Identification Number
Numbered List of employees to be covered (All full-time employees)
For group coverage, you’ll need to provide details that help define the employee demographics –
Number of dependents
The health insurance provider will use all this data to decide on premiums (and related costs) that match your organizational parameters and employee risk levels.
Instead of opting for a single standard plan, you may be able to offer your employees a few choices—and they can select whatever that works best for them. Accordingly, employees can have different premiums and payment plans depending on the kind of coverage they opt for. The employer however gets to choose the percentage of the medical coverage they want to cover- i.e their bill will remain under control.
4.Buying Insurance Directly
There are a variety of ways to shop for small business group health insurance plans. If you have chosen an insurance company and a plan that suits you best, you can contact the provider directly.
While some insurance companies only work through brokers, some do work directly with business clients. As a small business owner, you might be able to land an attractive rate by going directly to the source.
While directly approaching insurers can give you almost full decision-making power, it can also be very overwhelming. So if you choose this option, make sure that you understand all the nitty-gritty and pick a plan that truly suits your requirements.
5. Why Hiring an Insurance Broker Makes Perfect Sense
Keep in mind that the more you “outsource” or rely on third parties, the more time you will gain while the more money you will have to spend. However, there are several compelling reasons to go for a licensed insurance broker when scouting for health insurance.
The time and effort you or your business will save is the most important of them all. Rather than scout around for group insurance plans, small business owners are better off devoting the same energy to growing their business.
An experienced broker can ensure take up plans with the most suitable policies, and be of help with implementation and renewals.
They also ensure that your business is compliant with all relevant laws, and help with the (inevitable!) tonnes of paperwork.
In general, brokers earn a commission when you sign up for a group insurance plan that matches your requirements. Accordingly, you wont need to make any separate payment(s) to them.
Our advice to small business owners would be to try and become familiar with the small health insurance marketplace on their own. Once you gain enough understanding, you can seek out professional help on what confuses you.
In the end, putting a small business health insurance plan in place is well worth the time and trouble.
James Eckardt is the founder of Peak Advisors Inc., a boutique insurance brokerage on Long Island, NY. The firm has a stellar record of service with three decades of experience in health insurance coverage and hundreds of clients including small businesses, commercial enterprises, sole proprietor-ships and seniors