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Choosing the Best Health Insurance Plans for Small Businesses

Business owner looking for the best health insurance

When it comes to employee benefits, health insurance reigns supreme. Finding the best health insurance plan is critical for employers who want to attract the best possible candidates, keep existing employees happy, and control costs.

Listen to the article: Choosing the Best Health Insurance Plans for Small Businesses
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The search can be daunting. Between plan types, providers, deductibles, copays, and endless other considerations, it’s far from obvious which plan is best for your clients’ businesses. As a broker or trusted advisor, this is where you can shine brightest. You can take the guesswork out of choosing the best health insurance plan for your small business clients.

This guide will help you do that. In it, we’ll cover:

  • The difference between common plan types includes HMOs, PPOs, and Group Health Plans.
  • Reasons why an employer might want to choose one plan type over another.
  • Common factors small businesses should consider before choosing the best health insurance plan.

First, let’s cover the basics by discussing what different plan types mean for your clients.

Types of Health Insurance Plans for Small Businesses

Although more exist than we can fit into this list, there are at least four common types of health insurance plans that most insurers offer. They are HMOs, PPOs, HDHPs, and Group Health Plans.

Group Health Plans (GHPs)

Group health insurance is the most common form of coverage for small businesses. It allows employers to offer a single health insurance plan to all eligible employees, pooling together the risks and benefits for the group.

  • GHPs typically have lower premiums compared to individual health plans because the risk is spread across the group.
  • The employer also typically shares the cost of the premium with employees, making it even more affordable for both parties.

Group plans are ideal for businesses wanting to provide a uniform level of coverage to all employees.

Health Maintenance Organization (HMO)

HMO plans are known for their lower premiums and emphasis on preventative care.

In an HMO plan...

  • Employees must choose healthcare providers within a specific network.
  • Referrals are typically needed from a primary care physician (PCP) to see specialists.
  • This tight network allows insurers to control costs, leading to lower premiums and out-of-pocket expenses for employees.

HMOs are great for businesses looking to keep their costs predictable, as the emphasis on in-network providers leads to lower premiums and copays. The downside is that employees have limited flexibility and may need referrals to see specialists.​

Preferred Provider Organization (PPO)

PPO plans offer more flexibility in choosing healthcare providers.

With a PPO plan...

  • Employees can visit both in-network and out-of-network doctors, but they save more money by sticking to the network.
  • Premiums are usually higher compared to HMOs, but the trade-off is greater freedom in selecting doctors and specialists without needing a referral.

Employees appreciate the flexibility, especially if they need specialized care that may not be available in-network​. On the flip side, there are higher premiums and out-of-pocket costs compared to more restrictive plans like HMOs​

High Deductible Health Plans (HDHP) with Health Savings Accounts (HSAs)

HDHPs have lower monthly premiums but higher deductibles.

  • HDHPs are typically paired with HSAs, which allow employees to save pre-tax dollars to pay for qualified medical expenses.
  • HDHPs are characterized by high deductibles, during which the employee will need to rely on an HSA or their own pocket to cover medical expenses.
  • After the deductible is met, the plan begins to cover a portion of medical costs, which varies by policy.

HDHPs are a good fit for healthier employees who don’t expect to need frequent medical care but want coverage for major medical events. The downside is that employees bear higher out-of-pocket costs upfront, which could be a burden in case of unexpected medical expenses.

4 Factors to Consider When Choosing the Best Health Insurance

Regardless of which insurance provider you go with, there are certain metrics you should use to evaluate every plan offering. Here are four of the most important.

1. Plan Flexibility

Flexibility refers to network coverage and care options. In general, flexibility is a luxury that is paid for by increased premiums.

Small businesses will need to evaluate their workforce to determine if their employees have particular needs or circumstances that necessitate increased flexibility. One example might be a workforce that travels frequently.

2. Cost and Premiums

The cost of premiums is always a major consideration. A low premium generally means lower-tier benefits and higher out-of-pocket costs, and the inverse is also true. Small businesses need to strike a balance between providing valuable benefits and managing their budgets.

If up-front cost is the most crucial factor, low-premium options like HDHPs are a strong option. For companies with higher-paid employees or needing more generous benefits, absorbing the higher premiums of an HMO or even PPO can be beneficial in the long run.

3. Employee Demographics

Employees' age, health, and family status play a significant role in determining the best plan type.

  • A workforce that is youthful, generally healthy, and independent (not supporting a family) may prefer a low-premium HDHP with an HSA.
  • On the other hand, an older workforce or one with families may require more robust coverage, providing better access to a range of providers and specialists.

4. Additional Perks and Wellness Programs

Many health insurance providers now offer added value through wellness programs, telehealth options, and preventative care services.

Small businesses that want to attract top talent and promote employee well-being should consider plans with comprehensive wellness programs. Offering perks like telehealth and fitness incentives can boost morale and productivity, making these features worthwhile even if they come with slightly higher premiums.

BBSI Referral Partners Get Access to the Best Health Insurance Plans

There is no one-size-fits-all best health insurance, especially for small businesses and their highly diverse needs. As a broker, you’ll provide your clients with the best service by being aware of the many types of health plans, their benefits, and, most importantly, how to access them at affordable rates.

BBSI can help. Our referral partners have access to a national network of small business health plans at rates usually reserved for large corporations, allowing you to offer your clients plan options at rates they couldn’t get on their own. This will help your clients attract better talent and keep their employees happier and more productive.

Interested in learning more about becoming a BBSI referral partner? Contact your local representative today.

Disclaimer: The contents of this white-paper/blog have been prepared for educational and information purposes only. Reference to any specific product, service, or company does not constitute or imply its endorsement, recommendation, or favoring by BBSI. This white-paper/blog may include links to external websites which are owned and operated by third parties with no affiliation to BBSI. BBSI does not endorse the content or operators of any linked websites, and does not guarantee the accuracy of information on external websites, nor is it responsible for reliance on such information. The content of this white-paper/blog does not provide legal advice or legal opinions on any specific matters. Transmission of this information is not intended to create, and receipt does not constitute, a lawyer-client relationship between BBSI, the author(s), or the publishers and you. You should not act or refrain from acting on any legal matter based on the content without seeking professional counsel.

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