Talent is indispensable in a small business, and offering health insurance is one effective method of fostering employee loyalty. Statistics from the U.S. Census Bureau show that, indeed, 85% of the workforce in the United States have received health insurance coverage from the best health insurance companies for the duration of their employment.
The law is also very explicit about health insurance for employees. Businesses that employ more than 50 full-time employees must sponsor at least 95% of their workforce’s health insurance. Otherwise, the Internal Revenue Service will require them to pay a fine for violating the Affordable Care Act.
Entrepreneurs need to brush up on their knowledge about health insurance as part of their responsibilities. They must learn what types of insurance are available, what are the ideal options for their cash flow constraints, and how they can shop around for the best company to partner with.
Overview of Available Health Insurance Types
There are six available health insurance types that employers can select for their workers. These are, namely:
Health Maintenance Organization
HMOs are the most common primarily because of their lower premium costs. These health insurance plans offer very low costs. At the same time, HMOs offer as wide a range of care options as possible to the plan holder. HMOs generally require plan holders to stick to providers within their policy’s network. Otherwise, they have to pay higher healthcare rates. They also require referrals from an in-network physician before covering members’ specialist care expenses.
Preferred Provider Organization
PPOs are less restrictive when it comes to specialist access. Members enjoy flexibility, which means that they can choose to visit specialists that are not accredited by the network or remain with in-network care providers. In exchange, however, PPO plans impose higher premiums than HMOs, especially in the group coverage.
High Deductible Health Plan
HDHPs are plans that require the member to pitch in at least $1,400 before it goes into effect. These plans’ network limitations can either match that of an HMO or a PPO. HDHPs also impose a limit on how much people can shoulder in-network for their healthcare needs. For 2022, the IRS keeps the limit at $7,050 for individual plan holders and $14,100 for families.
Point of Service Plans
POS health insurance combines the attributes of the HMO and PPO plans. Like HMOs, plan holders need to secure a referral from an accredited physician before they can schedule visits for specialists. However, plan holders enjoy the flexibility of choosing out-of-network specialists as offered by PPOs. POS plans generally have lower premiums than both PPO and HMO policies.
Flexible Spending Accounts
FSAs pool a member’s payments together into a healthcare fund that employees can draw from throughout the year. The money is deducted from the employee’s salary every payday. Employers can contribute to FSA accounts if they choose. FSAs are not without disadvantages. First, most of the money must be used up for healthcare-related expenses by the end of the year. This is because only $550 of the total amount can be carried over the next year. Second, FSAs cannot be used for health insurance premiums.
Health Savings Accounts
Last but not the least, health savings accounts are where workers can funnel money that’s intended specifically for healthcare expenses. It is generally a supplement to the high deductible health plan or HDHP.
Unlike FSAs, HSAs give employees full control over how much money is saved and when the money can be taken out for healthcare costs. Another benefit to setting health savings accounts is their non-taxable nature.
Questions to Ask When Picking Health Insurance Companies
Knowing what options are available for health insurance is only the first step. The next step for the entrepreneur is to know how they can land on a health insurance plan for their employees that is both economical and useful. Like any good consumer, small business owners need to ask themselves several questions while going through their options.
These questions include the following:
· How much can the business afford to spend on health insurance policies without breaking the bank?
· How low are the premiums if the employee agrees on a high deductible amount, and how much can they use for their healthcare costs?
· How many specialists and physicians are enrolled in the healthcare provider’s network?
· Are there options for dental or vision plans?
The goal of these questions is to gauge how cost-effective each prospective healthcare plan is for both the small business and its employees. Entrepreneurs should be able to maximize the benefits of the healthcare policies while also keeping the cash flow lean.
Health insurance is a very effective tool to both foster employee loyalty and boost workforce productivity. Giving employees access to vital healthcare services ensures that they are always fit to work and can function to their full capacity. Employees also feel well taken care of at work, and happy employees are the most productive.
Choosing the right insurance policy is key to making full use of the advantage that healthcare plans offer every business and every employee. This would require a thorough knowledge of all available options and understanding what each policy has in store for both the business and the employee. Business owners would need to conduct due diligence with healthcare policies like they would when facing a new investment opportunity.
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