With the many different facets of health insurance, shopping for the right kind of coverage can be a daunting task for small business owners. With various policies, regulations and requirements, there is a lot to consider – not to mention the fact that health insurance is often the largest expense next to wages for a company.
When considering health insurance options, there are three questions you need to ask yourself:
• Am I looking to provide the richest benefit for my employees?
• Am I looking to keep premium costs as low as possible?
• Or am I looking for something in the middle?
If you’re unsure where to begin answering these questions, seeking outside help is a good place to start.
“The first thing a small business should do is look for a licensed professional agent to guide them through the process,” says Scott Leavitt, president of Scott Leavitt Insurance and past president of the National Association of Health Underwriters. “Most people have no idea what to do, and agents are trained to help.”
“In this world today there are new provisions and new regulations coming out every day and you want to make sure you’re working with someone knowledgeable and make sure you’re being taken care of,” he continues.
Carson Frankovits, an insurance broker with Barrett Benefits Group, also recommends having some sort of counsel, be it a broker or somebody with experience. Obviously purchasing insurance for a group of people is different than purchasing insurance for yourself so it’s worth it to have that extra help to make sure you meet the requirements and get the best plan for your business.
The terms “agent” and “broker” are sometimes used interchangeably, so it’s important to be aware of the difference when seeking an expert’s help. An agent will typically represent one company, while a broker will represent several insurance companies.
When third-party brokers work with businesses, their job is to look at the market and the options in the area of the business, then make sure their client is matched with the most competitive insurance carrier available. Some agents may also take this approach.
“All the carriers offer different products, some of them kind of mirror each other, but there are slight variances,” says Frankovits. “(A broker or agent’s job is) to make sure that the benefit they’re purchasing is the strongest benefit that they can get for a small business’ employees.”
“Brokers also make sure that the costs are in line with what the market is actually allowing,” he continues. “Sometimes there are some carriers that price things incredibly high and there are carriers that price things that are very competitive, so (you should) kind of marry those things for the strongest benefit with the lowest cost.”
Brokers and agents will walk small businesses though the entire insurance process, looking at the makeup of a company and collecting information required by potential insurance carriers. They will also help with applications and company enrollment.
In addition to helping a business shop for insurance, brokers and agents also serve as a resource for your business, which is included in premium prices. They help to conduct enrollment meetings with your staff, assist with billing questions and work with carriers to resolve different claims, Leavitt shares.
“Without an agent you’re on your own; you’re going to have to figure it out and handle that all by yourself,” he says.
Questions to Consider
Coverage: First is to decide who you want to cover and to what level. Are you providing health insurance for just employees, or employees and their families?
Cost: Most states require a business to cover at least 50% of the premium costs, Leavitt says. Be sure to account for cost-per-employee per month premiums in the budgets.
Strategy: Have a clear idea of why you want to offer health insurance coverage, Leavitt advises. Is it to attract new employees or retain employees? Is it to cut back on sick time? Understanding the goals and incentives for coverage can help pair you with the right insurance product for your business and your budget.
Benefits Package: A business may want to consider other insurance offerings at the same time it considers health insurance, including vision, dental and life insurance.
Requirements: Businesses with more than 20 employees must also participate in COBRA if it decides to offer its employees health insurance. COBRA is a federal law that lets employees keep their group health plan coverage for a limited time after employment ends. COBRA also creates other obligations a company may be responsible for, so a broker or agent can connect you with a Third Party Administration (TPA) to help meet those requirements, Leavitt says.
Reviewing Your Options
Since the health insurance industry is ever evolving, it’s important for businesses to reevaluate your plans annually to make sure you’re getting the best rates and coverage available.
Obamacare and Your Business
With the passing of the Affordable Care Act (ACA) and new healthcare insurance regulations, larger businesses are required to provide health insurance for their employees or face paying penalty fees for not providing coverage – however, there is a way to avoid the fee. As long as a business provides proof they offered health insurance to at least 95% of their full-time employees (even if a few of them refuse the offer), the business can avoid paying the penalty fee.
Smaller businesses (those with less than 50 full-time employees) are not required to provide health insurance, and don’t face a penalty fee for not offering it. Instead, the Small Business Health Options Program (SHOP) offers tax breaks of up to 50% if they purchase health insurance for their employees.
The number of employees is now the greatest determining factor for health insurance policies after the passing of the ACA. How many full-time employees work for a company determines which carrier that company goes to for a quote. This threshold also needs to be a consideration as you grow your business.
Health insurance marketplaces (“exchanges”), or websites where individuals and businesses can shop for health insurance online, have been set up at the state and federal level. Check if your state has set up its own exchange by going to obamacarefacts.com.
Questions to Ask an Agent or Broker
– How long have you been licensed in the industry?
– Do you represent more than one company? If so, which ones?
– Do you hold any certifications or designations?
– How responsive or available are you to answer or questions?
– What additional support services do you offer?
– Do you have a website?
– What can you offer to my employees?
– Can you provide references?
Note:You can find a licensed agent or broker at www.nahu.org.