Choosing A Health Insurance Plan for Your Employees

Most employees consider health coverage the most important employee benefit. Health insurance is an attractive benefit for an employer to offer, since the cost of healthcare financing is tax deductible for businesses. However, not all insurance plans are an equally good bargain for a business. Below are some guidelines for choosing a health plan that will work well for your company and may also assist with your healthcare financing budget.

What Type of Health Insurance Should My Company Offer?

Traditional health insurance is the choice of most small businesses . Its biggest advantage is the flexibility it provides employees, allowing them to visit any doctor or hospital. However, although it is an option, it can be an expensive and may pose problems in health care financing for small businesses. It is sometimes more expensive to offer than managed care plans. Some managed care plans offer a "fee for service" option that mimics the freedom of traditional insurance. Although it allows greater choice, the co-pays and deductibles that employees pay can be very high.

Should My Business Use an Insurance Broker?

Most small businesses purchase group health plans from a broker. Brokers usually offer plans from five to fifteen insurers, and can be a great help in comparison shopping for healthcare financing. When choosing a broker, it is often best to find one that has experience in dealing with businesses of a similar type and in the same industry as yours.

Finding a Better Health Insurance Deal

If your business has difficulty finding affordable coverage directly from insurers, you may want to contact your state department of insurance to learn about small business group health providers in their area. Small businesses also can join an association that offers group benefits for their members such as tips on healthcare financing. However, before taking advantage of any such plans, your business should scrutinize them as carefully as any other plan it might evaluate.

Evaluating a Policy

Look to the list of policy criteria you created. A plan should meet those goals as closely as possible.

Costs of health care

The next step is to look at cost -- to the employees as well as to the company and its healthcare financing budget. Look at the cost of the plan, the deductibles, and co-insurance costs. How much of the plan will the company be able to pay for? If it can't pay for the entire cost, how much will the employees have to contribute? Is it in line with their salaries? Also, the employer should calculate whether deductibles and co-insurance exceed what an employee can afford on his or her salary.

Health insurance coverage

Next, the employer should read the fine print about what types of conditions are covered. Some policies will limit coverage to specific conditions, or cover them only up to a ridiculously low maximum payment. Coverage for long-term illness and pre-existing conditions are areas where these low limits are often seen. The total coverage for the policy should be at least $1 million, since costs for treating catastrophic illnesses can easily reach this amount.
Providing healthcare to employees is an attractive benefit as well as a good investment in your business. Choosing the right plan within your company’s healthcare financing budget is an important part of being a small business owner. It’s an attractive benefit for an employer to offer and surveys have shown that offering health insurance is good for increasing retention, improving recruitment and attitude, and lowering absenteeism.

Reported by MedeFinance.com and reprinted from Knol under Creative Commons.