03/30/15

Health Insurance and the Small Business Owner: Know Your Options

On February 21, 1991, President George H.W. Bush made a proclamation to the United States in which he declared March 30th as “National Doctors Day” to recognize physicians for their service to their fellowmen and the “tremendous responsibility it entails.”

So, seeing as it’s the 30th, Happy National Doctors Day.

In the spirit of this magnificent holiday, I want to talk about a pillar in the healthcare industry—health insurance. Moreover, as a small business owner, what are your options for health insurance? Should you do a personal/self-employed insurance plan, or should you do a group/small business plan?

Lend me your attention as I talk about the merits of both so that you may have a better idea on the type of insurance plan you would like when you start your own business or when your renewal comes up.

Should I Get Health Insurance?

Providing health insurance is no easy process. What health insurance provider is the best for me? For my business? What type of plan should I go with? These are questions many small business owners have. In fact, almost half of the uninsured individuals in America are small business owners, their employees, or dependents of both.

So why is this number so high amongst small businesses? It could be a number of things. Perhaps the cost is too high; the average premium cost per employee on a monthly basis is $2,084.67 and most states require businesses to pay at least half of this premium. It could also be that business owners simply don’t understand the in’s and out’s of having health insurance for themselves or their businesses.

Self-Employed

You may think that because you are self-employed there aren’t any insurance options out there available for you, or that you will just pay for any medical bills that come up with profits from your business; after all, you don’t have to make payroll or be held accountable to anyone else besides your family.

I would recommend against this thinking as the benefits of having a personal health insurance plan far outweigh their drawbacks.

Having health insurance will help you protect your personal and business finances. Medical bills can be crippling and require you to use money from your business to cover stifling expenses. You don’t want to lose your business due to a medical emergency.

It may be worth the premium in itself if your family has a lot of prescriptions to fill on a monthly basis, or regular checkups. You even have the freedom to choose if you want to pay a higher premium and lower co-pay/deductible or vice versa.

Small Business with Employees

Now if you own a business that has employees, the decision to get group health insurance will come up plenty of times, and most people depend on it. The nice thing here, if you’re small enough, is that you can discuss with your employees to see what everyone would like to do. Should I get a group plan, or not? Would everyone prefer a higher premium, or a higher deductible? You could even offer multiple plans where one has a higher premium, and one has a higher deductible if need be. It is important to note:

If you have less than 25 employees and if average annual wages are below $50 thousand, you qualify for tax breaks when you offer group health insurance as a benefit. Just know, however, that many states will require the business to pay at least half of the monthly premium per employee.

If you have over 50 employees, you have to either offer a group health insurance plan or pay a tax penalty per employee.

Right now, nobody is forcing you to get a group plan for your business (unless you have over 100 employees), but 67% of small business owners say that offering health insurance as a benefit is VERY important in recruiting or retaining top quality employees. At every company, the employees are what make the difference.

 

Sources:

http://www.doctorsday.org/History.html

http://www.nsba.biz/wp-content/uploads/2014/02/Health-Care-Survey-2014.pdf

https://www.ehealthinsurance.com/small-business-health-insurance/resources/buyers-guide.pdf

http://obamacarefacts.com/obamacare-small-business/

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