Wednesday, January 16, 2019

Health Insurance Options for Small Businesses - Part 2

Two options were covered in the first part of this blog. Here are three more popular and viable health insurance options designed for small businesses.

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Group integrated health reimbursement arrangements

High Deductible Health Plans (HDHPs) are among the most widely used group health coverage options. One reason for this popularity is the low cost of coverage. The problem with them is that the low cost is due to the high deductibles and the limited coverage they provide. HDHPs may meet the requirement of providing employees with healthcare, but they typically do not meet all healthcare needs or cover all the costs. One cost-effective way of making up for the shortfall is to offer a Group Integrated Health Reimbursement Arrangement (GIHRA). With a GIHRA the employer allocates a monthly tax-free allowance to the employee that is in addition to the group policy. The employees can use this to pay health care costs and the employer will then reimburse them to the extent of the amount allowed to them. Businesses can set up their own employment eligibility requirements and allowance limits.

Association health plans

Associated Health Plans (AHPs) allow small businesses within the same industry segment or in the same geographical location to jointly purchase large group coverage. Because of the larger size of the employee pool, the cost per employee, can be substantially lower than other coverage options. However, in some cases, standard coverage items and essential health benefits may not be covered. Businesses joining together for an AHP must ensure that they all have the same employee health care objectives. Without this, the conflicts that will arise on the amount and types of coverage, can render the plan inoperable.

Self-insurance

Self-funded health insurance is an option that some companies go in for. In this case, there is no health coverage from an insurance company and so there are no premiums to pay. Instead, the employer takes up the financial burden of providing health care to the employees. The eligibility, types, amount of coverage and deductibles etc. are all provided in a formal coverage plan that is made known to all employees. The positive here is that since there are no fixed payments to an insurance provider, the financial outflow will be limited to only actual costs covered by the plan. The risk, of course, is that the payments towards healthcare costs will exceed what the insurance costs would have been. In the worst case scenario, the financial outlay could cause irreparable financial damage to the business.

Lots of options – lots of ways to make mistakes

The aim of all these health coverage options is to reduce the financial burden on small and medium enterprises. Each one has its own pros and cons and navigating through the complexities of the coverage options can not only be time consuming, but also very confusing. Making the right decisions will result in a happier and more motivated workforce that will have a positive impact on business performance, while the wrong choice could result in a demoralized workforce and lower productivity. Contacting an insurance broker is the best way to be sure of making the right choices. He will evaluate the coverage needs of the employees and suggest the health plan that will be best for them and the company itself.

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