Q: "What health insurance options do I have as a small employer?"
A: You have MANY!
Despite what you may have heard, “small” employers (i.e., those with 2 - 49 full-time employees, not including themselves or their spouse) have several options available to them when it comes to group health insurance.
The question that small employers should be asking themselves (and Pendella!) is, "what is the BEST option for me, based on my budget and coverage needs?"
In order to help you identify the answer to that very important question, we’ve outlined the key elements of the most popular health insurance options that are currently available to small group employers.
Your Health Insurance Options as a
Small Group Employer:
OPTION #1: Community-Rated, Fully-Insured Health Plans
- Community-Rated, Full-Insured Health Plans are your traditional health insurance plans (like what you see from carriers such as Blue Cross, United Healthcare, Anthem, etc.).
- Your premium is based only on the ages of your employees. (Except in some states, where the rates simply are what they are - mandated by the state - regardless of your group composition.)
- You pay the premium = you get your health plan and the benefits that accompany it.
- You will never pay more than your monthly premium cost (and your out-of-pocket costs, according to your plan's benefit structure), and you will never receive any money back for your group being healthy throughout the year.
- Level-Funded Health Plans act and feel like traditional plans (like those you would find from Blue Cross, United Healthcare, Anthem, etc.); however, they are underwritten.
- The rates for these plans depend on the demographics of your group, as well as your healthcare consumption.
- These plans can cost 10-40% less than fully-insured plans; however, you need to qualify for them.
- In order to see if your group qualifies for a level-funded health plan, employees will need to fill out an online medical questionnaire.
- If your group happens to have a healthy year with minimal claims, you will receive a rebate for unused claims dollars!
OPTION #3: High Deductible Health Plans + Personal Care Accounts
- Purchasing a high deductible health plan (“HDHP”) can save you 10-40% on your premiums over a traditional copay plan.
- You can take a portion of that premium savings and put it into a personal care account, such as an HSA, HRA or FSA.
- These personal care accounts are tax advantaged accounts that can be used throughout the year to pay for various healthcare costs.
OPTION #4: High Deductible Health Plans + Accident and Critical Illness
- Purchasing a high deductible health plan ("HDHP") can save you 10-40% on your premiums over a traditional copay plan.
- You can take a portion of that premium savings to purchase an Accident and Critical Illness policy.
- Accident plans pay you when you have an accident (e.g., a broken leg, emergency room visits, surgeries, etc.).
- Critical Illness plans pay you a lump sum if you are diagnosed with cancer, have a heart attack or a stroke, experience kidney failure, or need an organ transplant.
- Both Accident and Critical Illness policies can help cover the deductible on your HDHP if you happen to have an accident or a serious illness.
OPTION #5: QSEHRA (Qualified Small Employer Health Reimbursement Arrangement)
- A QSEHRA (often pronounced as “Q-Sarah”) is an excellent option for employers who can’t afford the cost of a traditional group health insurance plan, but still want to offer some level of benefit to their employees.
- Each month, employers set aside a specific amount of (tax-free!) money that their employees can use to cover medical expenses or to purchase individual health insurance plans.
- Employers have the freedom to choose:
- How much they reimburse their employees
- What to reimburse
- Whether to include part-time employees
- Waiting periods
- When to start
- There’s no need to stress about compliance and notifications because you’ll get automatic tax-compliance and reporting through your plan administrator.
These types of decisions can be tricky, but that's what Pendella is here for — to help you make informed decisions about your group benefits plan.
Our Benefit Advisors are available to answer your questions via phone, email or chat.
Request a quote or contact us to learn more!