What to look for when shopping for business health insurance plans
Shopping for business health insurance plans can be confusing and overwhelming. With so many options, how do you know which one is best for your business? For your employees? Can you afford health insurance? Can you afford not to? Don’t worry. We’ve got you covered.
First of all, you may be more likely to afford business health insurance than you think, even if you are a very small business. A Kaiser Family Foundation study found that almost 50 percent of businesses with 3-9 workers offer health insurance benefits to their employees, and 71 percent of firms with 10-24 employees do. A more recent study found that more than 30 percent of firms with fewer than 50 employees and 97 percent of firms with 50 employees or more offer health insurance to employees already. As labor competition and plan options increase, we can only expect those numbers to rise.
Yes, cost is always a concern, but not all health insurance plans come with a massive price tag. In fact, if you are part of a small business, your costs can be much lower than those for large enterprises that rely on the “Big 5” insurance companies, namely United Healthcare, Anthem Blue Cross Blue Shield, Aetna, Cigna, and Humana. These traditional plans may be what people are used to, but their monopoly on the healthcare system allows them to charge a whole lot more than what is necessary for excellent coverage.
Thankfully, you have alternatives. For less capital investment, you can offer your employees health benefits that include comprehensive health, vision, dental, telemedicine, maternity care, fitness passes, mental health support and more, all without worrying about network restrictions and arbitrary pricing.
Ready to get started?
Step 1: Determine what you want in business health insurance
Before you can shop for business health insurance plans, you have to know what you want in the plan. What type of coverage are you looking for, what can your business afford, how much risk do you want to take on, and how much administrative support will you need? For instance, are you looking for a comprehensive plan that provides medical, dental and vision insurance, as well as pharmacy benefits, health savings account plans, and wellness perks? Do you want to administer and manage the plan in-house or would you prefer the provider or a third-party administrator manage it?
It is a good idea to survey your employees to find out what is most important to them, too. After all, the whole point of providing them with healthcare benefits is to keep them happy and healthy. Do they want to choose their doctor or do they mind being limited to “in-network” providers? Do they require a variety of plans to fit their budgets and medical care needs? Would they use telemedicine if it was available?
Draw up a checklist of priorities – the must-haves, nice-to-haves, and unnecessaries. This will help you narrow down your search. Consider everything from cost to coverage to management.
Step 2: Choose the type of plan
There are several types of business health insurance plans from which you can choose. There are nuances and intricacies to each of these types of plans, but we wanted to give you a brief summary to help differentiate.
Fully-Funded Health Plan (Employer-Sponsored)
You and your employees are likely most used to a fully-funded plan where the employer pays a set premium to an insurance carrier for employee health coverage whether employees use all of that coverage or not. More than half of the U.S. population is covered by this type of insurance plan. The carrier establishes the premium price each year based on their perceived risk, administrative fees to manage the plan, market costs, and how many claims they covered for you the previous year. While you will know exactly what you will pay that year, the carrier can name their premium price year to year, often limit members to in-network providers, and provide little plan customization or flexibility.
Self-Funded Health Plan
Self-funded health plans are a bit different. Instead of a pre-paid premium, the employer pays its employee’s health claims as they occur. Your company pays some and collects the rest from your employees to pay the medical claims out-of-pocket as employees file them. Your company is also responsible for administering and managing the plan. In essence, you take on the financial risk and administrative burden, but you are only paying for what your employees use. You can hire a Third-Party Administrator (TPA) to manage the plan for you for much less than what you would pay a traditional carrier. You can also pay for stop-loss insurance to protect your company against large claims that exceed what you’ve set aside to pay for claims. You will pay less in taxes than with fully-funded plans. Because you have control over the plan, you can customize the plan to fit the needs of your business and your employees.
Level-Funded Health Plan
A level-funded health plan combines the predictability of fully-funded with the flexibility and cost-savings of self-funded health plans. You will pay a fixed monthly fee to a third-party health services company to administer and manage the plan for you. You know what your cost will be each month for greater predictability, and if actual claims are less than what you paid that month, you receive reimbursement. If they are more, your stop-loss insurance kicks in to cover the difference. This ensures you are only paying for what your employees actually use. You can also customize the plan to fit the needs of your business and employees, have no network limitations, save on taxes, and have full control over the plan.
Step 3: Shop Providers
Once you know what type of business health insurance plan is best for your business and your employees, it’s time to look at providers. In the past, small businesses were limited in who they could partner with for health benefits. Today, however, demand for more flexibility and lower health plan costs is giving way to more self-funded and level-funded providers.
Sana Benefits is a relatively new healthcare company that continues to receive investor funding because our level-funded model is precisely what businesses want: reduced costs, transparent pricing, and rich coverage without so many restrictions. Just recently, we received nearly $21 million n Series A funding, allowing us to expand our offerings to more businesses.
Sana offers full medical, pharmacy, dental, and vision benefits, plus the tools you need to easily manage your plans, such as benefits analytics, plan administration and management, and navigation and patient advocacy. You save money and your employees can choose a plan that fits their budget and lifestyle, go to any doctor or specialist they want, get free telehealth appointments, and have access to all kinds of health and wellness perks.
Step 4: Engage Your Employees
Health insurance is likely just one part of your company’s benefits package, but it is an important one. One study found that more than half of employees surveyed said health insurance is the most important benefit that impacts their job satisfaction. Offering good health insurance benefits can help you attract and retain top employees, giving you a competitive advantage over other companies who either do not offer health insurance benefits or offer only limited plans that are expensive.
This may be the first time you are offering health benefits to your employees, or perhaps you are changing from a fully-funded health plan to a self-funded or level-funded health plan. Whatever the situation, your benefits program is an investment on your end – one that you want to reap its intended rewards. Market the plan to your employees to encourage enrollment. If employees don’t enroll, they don’t get to experience one of the benefits of working for your company. Participation from employees in health and wellness programs will also lower your healthcare costs over the years as they become healthier.
Use different channels to get the message out about new health insurance options and open enrollment. Emails, team meetings, company meetings, messaging apps, intranet sites and old-school posters will ensure you reach everyone. Get managers involved as well. They can be benefits champions and even set up a competition between teams to see who gets the most employees enrolled. Be creative, make it fun, and continue to tout the awesome benefits you are offering.