Authored by Jayant Row in Insurance, Small Business
Published on 04-18-2009

Employers are not bound by law to provide for health insurance for their employees, but it is considered a benefit and an attraction to retain good workers. It is by far the most expensive of the benefits that an employer can offer and therefore he needs to shop around and see that he gets sufficient coverage for his employees without having to pay very high premiums.

So what is the kind of health insurance that he can provide? Start locally with local business associations and chambers, and check the national association of the business you belong to. Also ask around with vendors and competitors and see the health coverage that they provide. Make a thorough study of the out of pocket expenses and lifetime cap on coverage and policies that cover wellness visits.

There are industry specific group insurance schemes that you can join. Also consider consumer driven health plans or CDHPs. It places more responsibility on the insuree and helps to cover health care needs directly. It allows a high amount of deductions and a health savings plan that is tax friendly. See whether the scheme allows you to carry over unused health plans to the next year so that premium costs are cut down. It will also allow debit card access to pay for items that are not covered.

Recently some companies have come out with accident expenses plans that protect a small business from out of pocket expenses that result from an accident or critical illness. This is especially useful to professionals who are at the risk of injury during their normal business, like an electrician is.

Group policies are generally taken based on the risk of the group and if a few of the individuals covered are at high risk it could substantially raise the premiums for everyone. If you are a very small group of employees it may make sense to opt for individual insurance and take advantage of the lower premiums. Whether you reimburse your employees is a thing that you as an owner may have to decide.

Most insurance companies offer plans that are specially targeted to the small business sector. As the competition for this business is quite fierce you can take advantage of this and look for the best policies with the lowest premiums. See that you also cover yourself in such plans.

The different types of health plans are:

Indemnity plans which will pay a percentage of the expenses (about 80 percent) of the expenses after the sums have exceeded the initially agreed deductible amount for which no cover is available.

Health Maintenance Organization or HMO plans; where you are required to choose your primary care physician who will then manage all your healthcare needs from within the network that he belongs to. The policy does not allow for any care taken from health care providers who are not part of this network.

Preferred Provider Organization plans are where the insurance company enters into contracts with a few selected hospitals and health care providers to provide medical care at discounted or special rates. If you go outside this selected group you are likely to incur higher deductibles before your claim is entertained.

HAS and HDHP which are Health Savings Accounts and High Deductible Health plans are actually savings plans that will help you to pay for the health care. Such payments made to HAS or HHHP plans are tax deductible and can be considered as an alternative to health insurance.