Finding the right type of health insurance plan to offer the employees of your small business is never easy, but it’s definitely easier than it used to be. The Affordable Care Act has ushered in options that can be really helpful for your company.
Choosing the best available option that fits your business’ needs is contingent on fully understanding what’s out there. Here are details about the top five health insurance options for small businesses in 2016.
Companies with between one and 50 employees — this range can vary, depending on the state — can use the Small Business Health Options Program (SHOP) Marketplace to provide small group health and dental plans to their employees. Some companies even qualify for the Small Business Health Care Tax Credit; the smaller the business and the lower the average annual salary, the bigger the credit.
Private Small Group Health Insurance Plans
Even with the fairly recent influx of headlines and buzz about government-affiliated medical coverage options, small businesses still have the option of choosing group plans from traditional health insurance vendors. It’s an especially noteworthy path in states where government offerings are not yet numerous nor robust.
Individual Health Insurance Plans
One of the most popular modern health insurance options for small businesses is to have employees select individual health insurance as part of a defined contribution health plan, in which the business establishes monthly allowances for insurance reimbursements.
By directing employees to the individual health insurance Marketplace in their state, small businesses can help everyone involved. The company streamlines its benefits management, keeps monthly costs predictable and gleans tax deductions. Employees pay up to 40 percent less than they would for traditional group health insurance, plus they are able to choose the coverage that best fits their unique needs. Eligible employees can access discounts on their premiums via the individual health insurance tax credits.
Private Health Exchanges
Similar to a defined contribution health plan, a private exchange allows an employer to give staff members money to spend on the medical coverage of their choosing, within the scope of participating vendors.
In a private health exchange, individual or group plans may be available. Private exchanges are offered through insurance brokers and specialized providers.
The driving goal behind nonprofit health insurance cooperatives, which were kickstarted by and are affiliated with the Affordable Care Act, is to beef up industry competition, provide a wider array of choices and drive down premium costs. Co-op coverage is offered and signed up for through the government’s health insurance Marketplace.
By late 2015, nearly half of U.S. health insurance co-ops had either closed or were planning to, casting doubt on the co-op system’s long-term viability. Various factors hindered the system’s ability to boost competition in the sector.
When deciding between health insurance options for small businesses take into consideration your employees' needs for different types of coverage, as well as your budget flexibility. Chances are, there’s a small business insurance option that will work well for your business. The breadth of available choices is at an all-time high.
If you have questions about the finer details of a particular benefits solution, please leave a comment below. We will get back to you soon!