Small businesses have various options available to offer some type of health insurance coverage to employees no matter what state the business is located. A small business owner can provide a managed care plan or an individual health insurance policy. States also have high-risk pools for businesses and individuals who cannot obtain health insurance coverage. Another option to a small business is to use a health savings account.
Employer Coverage
The most common type of insurance that a small business owner can offer employees is a group health insurance plan. Coverage that is provided by an employer is not required by federal law and is provided to employees voluntarily. Group health insurance plans offered by an employer are subsidized because they pay most of the premium. This is because group health plans provided by an employer can receive federal income tax subsidies.
Individual Coverage
Many small business owners cannot afford to provide health insurance coverage to their employees. As a result an individual health insurance policy will be needed. Small business owners who are sole proprietors may also require this type of policy. Individual health insurance coverage is regulated by the states. Some states require coverage to be guaranteed regardless of medical history and others allow insurers to decide if they want to provide a policy.
State High Risk Pools
Many states have set up high-risk insurance pools that act as the insurer of last resort in the states that they are offered. This means that individuals and small business owners who cannot obtain coverage in the standard market because of a health condition or other reason can receive coverage. The cost for a policy in a high-risk pool is going to be more than a policy from a private insurer. The eligibility for a high-risk pool varies depending on the rules for a specific state.
Managed Care Plans
A managed care plan uses a health maintenance organization (HMO) such as Blue Cross and Blue Shield or a preferred provider network (PPO) to provide health care. These plans have a network of providers that can be used but a primary doctor or physician must be chosen. An HMO will typically not pay for medical costs if an out-of-network doctor is used. An out-of-network doctor can be used with a PPO but individuals will be responsible for more costs.
Health Savings Plan
Small business owners can offer employees a health savings account that can be used with a high deductible health insurance plan. An employer and employee deposit funds in an account that can be used for medical costs. Pre-tax money is placed in the account that can then be used for a qualified medical expense. Money that is spent on a qualified medical expense will not be taxed as income.
Tags: health insurance, health insurance coverage, insurance coverage, account that, business owners
