Choosing health insurance is an important decision for an employer. Your choice can affect how attractive your business is to future employees, it can impact the health of current employees, and it can make a big difference in your profit margins at the end of the year. But how do you decide? Here are some guidelines to help you pick an insurance company.
Make Sure the Plan Meets ACA Requirements
First and foremost, your business should offer health care that meets the Affordable Care Act's rules for 2016. If you have 50 or more full-time employees, you need to offer minimum value, affordable health coverage to 95 percent of your full-time staff. This means plans must cover at least 60 percent of health costs, and the employee's cost must be less than 9.5 percent of their household income. Plans must also have no annual or lifetime caps, and they must limit out-of-pocket expenses. This can get a little complicated, so ask your broker for more details.
Choose Between Fully Insured vs. Self-Funded Plans
Many employers choose defined-benefit plans in the form of either self-funded or fully insured coverage. For these plans, you'll choose a group plan and pay a percentage of the premiums every month. Self-funded insurance refers to plans where employers bear the main risk of health claims exceeding the company's estimates for a given year. Some companies prefer this because, although the risk is higher, the overall cost is often lower. If you go this route, you may want to purchase stop-loss insurance that covers unexpected emergency claims.
Fully insured coverage refers to health plans where the insurance company shoulders most of the risk and employers pay higher premiums. Some employers who go this route choose to offer high-deductible plans so they can spend less each month on premiums. You can offset the increased cost burden on your employees by offering generous pretax health savings accounts to help with deductibles.
Consider Offering a Variety of Option
Some employers choose to go with an insurance company that lets them offer a menu of plans through an online private exchange. These plan types include preferred provider organizations (PPOs) and health maintenance organizations (HMOs), along with plans that offer different co-pays, premiums and deductibles. You can guard against excessive costs by setting aside a specific amount of money each month for each employee. If an employee chooses a plan that costs more, the employee covers the difference. Not all of these plans meet the ACA minimum requirements, so talk to your broker first.
Look Into Insurance Carriers That Offer Extras
If you're looking to attract and retain top talent while simultaneously lowering your long-term health care costs, then look for insurance companies that offer specialty plans and extra benefits. For example, you might want to provide dental insurance, life insurance, or accidental coverage options, or you could offer wellness options such as free in-house vaccines. You might even offer premium deductions for employees who meet certain wellness goals based on exercise or diet. Wellness goals are a great way to motivate employees to live a healthier life, which may in turn cut down on health insurance claims down the road.
Your Business Might Be Part of the SHOP Exchange
Some businesses with 51–100 employees have the option of buying their insurance on the Small Business Health Options Program (SHOP) Marketplace. SHOP originally applied just to businesses with fewer than 50 employees, but in 2016, some states may make the marketplace available to businesses in that aforementioned 51–100 range. If your state makes SHOP available for your business, it can be a great resource.
Choosing health insurance may feel daunting, but if you follow these tips as a general guide, it doesn't have to be overwhelming. Talk to an insurance broker if you have any questions specific to your business.
This article is part of a collaboration between Anthem and ADP. Visit Anthem's Making Health Care Reform Work blog for more best practices.
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