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How to Get Affordable Health Insurance as a Small Business
Affordable health insurance, with all the things a small business is facing you’d think this would be one item which would be relatively easy. After all, you are trying to give an insurance company your money.
Well, you’d be wrong. In fact, finding a health insurance plan which meets the needs of a small business can be extremely difficult at times. However, it does not need to be this way and in this article, we will explore how to get affordable health insurance as a small business.
1) Personal Health Insurance
While this is a relatively easy option, it is also hard to manage as the costs and coverage amounts can vary from person to person. However, the plus side of this approach is that it is the embodiment of individual choice as each employee effectively picks their own health insurance plan based on their needs.
From the perspective of a small business owner, the important item to remember is that you need to have a guideline for what YOU will pay for and what YOU won’t. This is called a Health Reimbursement Arrangement (HRA) and it means clearly spelling out what you will contribute towards health coverage. Don’t take this for granted as their might come a time when you won’t be able to pay. As such, you want to have a clear guideline in place today.
In terms of setting up an HRA, this is something which your agent should be able to provide support. When it comes to Small Business Health Insurance they (the agent) will be your go-to person for all the questions you may have. As such, you want to lean on that support as much as possible.
Also known as the Small Business Health Options Program, SHOP was designed to provide a government-run health insurance marketplaces for companies with fewer than 50 employees. While the program has had its share of detractors, the reality is that it has left its mark on the health insurance market by getting insurers to recognize the needs (and the potential) of small business customers.
Another benefit of the program, at least in some states, is that the government will help to subsidize the cost of insurance depending on certain qualifications. While this aspect of the program might not stay around forever, it might make sense to review.
3) Private Health Exchange
While the term has become a bit of a catchphrase in recent years, there is some substance to the concept of a Private Health Exchange. These markets were set up to allow small group employees a chance to create larger buying groups, which should help to lower premiums for all.
Beyond the buzz, the reality of these exchanges depends on the demographics of the group. If, for example, the coverage group is younger and healthier, then premiums will be lower. However, if the coverage group is less healthy, then this option might not be the best choice.
In fact, this has become a problem as the health insurance market in the U.S. has essentially become drawn up not by state but rather county lines. The result being that poorer, less healthy counties, tend to pay more on average for health insurance.
This option has been around seemingly forever but has only recently begun to reemerge as a choice in recent years. In some ways a co-op is similar to a private health exchange in that it allows people from separate employers to join the same insurance pool.
However, the function is not set up by the individual but rather it is mandated by the employer. Ultimately, the attractiveness of a co-op plan compared to other options will depend on the specifics of the plan and the laws regulating co-ops in the state where you buy insurance.
In fact, it is the legal restrictions which have curtailed the mass adoption of the co-op model over the years.
5) Private Small Group Plan
This is a plan which is purchase by the small business owner for his or her employees. Unlike the other options, the small business owner is often negotiating directly with the insurance companies and this often means they have less leverage when it comes to the costs.
As such, Private Small Group Plans are often seen as the second to last resort – with no insurance coverage at all being the other choice.
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