How to Choose the Best Group Insurance Plans for Small Businesses
by Arina Smith Insurance 05 May 2018
Endless mailers about the BEST insurance plan! Reminders from the government about mandatory coverage… reminders from your current carrier… what’s a small business owner to do?
You need to have a health plan to keep your employees happy. You fill out tons of redundant paperwork. You slog through emails and sit through seat-numbing presentations by agents. You telephone promising companies.
Still, premiums and co-payments rise. Your coverage gets more sparse. You get frustrated with the annual dance to land the best carrier for your business. Take a deep cleansing breath now.
Read on to learn more about choosing the best group insurance plans for small business.
Why Not Just Go With the Flow?
Many business owners opt in with the same carrier and plan for years. The process is simple, there’s nothing new to learn or software to install.
The coverage is the same as its always been. In fact, if this has been your method for a few years, it may be a good choice to outsource this task, like you would a bookkeeper or accountant.
Unfortunately, health insurance premiums have seen huge year over year increases for the past several years and insurance companies scramble to offer coverage for all.
Even as premiums rise, the coverage becomes more limited. As a small business owner, you feel the pinch.
It’s a good idea to spend a little time to get more info about what is available and affordable each year. Many companies offer a discount for businesses willing to change carriers.
On the other hand, some companies offer retention discounts. At a minimum, you should at least look at the alternatives every year.
Price for Group Insurance Plans for Small Business is Everything, Except…
Imagine telling your best employee their newly adopted child’s eye surgery isn’t covered. Or that their spouse’s cancer medication isn’t covered because it is a re-occurrence. But it’s covered, you might say.
Sometimes it isn’t by some policies. As a small business owner, there’s no one else to interpret policies for your employees.
Setting your price upper limit is smart business. After all, your profitability is at stake. However, setting your price limit first means you will not see the range of options available.
Negotiating only on the basis of price is costly in terms of time and effort.
When choosing your group insurance plan, look at the coverage options first, then negotiate on price. You need to know what is most important to you and your employees before narrowing the field. You may find that the least expensive option will cost you, employees, instead. To learn more about the kinds of insurance that can work for you, you can speak with specialists like those at Everdays.
Why Even Offer Group Insurance?
Many people are under the impression that Canadians have access to free healthcare. In reality, Canada has some of the longest waits for critical care in the world.
The government health care plan covers physician visits and in-hospital care for critical illnesses, but medication is usually not covered for those between ages of 25 and 64.
According to a recent study released in 2017 by IMS Brogan Health Canada, healthcare prices alone rose 7.4% per year from 1998 to 2008. At the same time, more Canadians are seeking healthcare in the end stages of life.
With rising healthcare costs, many families need supplemental insurance to deal with the $6,600 per person costs. It’s a good idea to spend a little time to learn more about what group insurance policies are available and affordable each year.
Many companies offer a discount for businesses willing to change carriers. On the other hand, some companies offer retention discounts. At a minimum, you should at least look at the alternatives every year.
As competition for skilled workers becomes more frenzied, keeping your existing employees is a priority. Luckily, there are some alternatives.
Traditional Group Health Plans for Small Business :
Each option comes with a menu of benefits already attached to the policy. You and your employees will have to decide if that is right for your needs.
Then, you can decide if the company will pay the premium or if the employee will be responsible.
If your employees are young (under 24 years), coverage is supplemental to provincial health services.
You want to compare the coverage for typical benefits such as dental visits, prescription drugs, vision care or out of country travel. For example, if you or your employees frequently travel for business, travel coverage may be important.
For rare travel, one-time purchase of travel insurance is economical, but more than a few visits abroad and it becomes very expensive for very little coverage. If your work requires international travel, having good out-of-country coverage gives you peace of mind.
Compare your small group health insurance providers’ worldwide coverage. Some plans only cover emergency situations, while others are comprehensive.
If you are stuck in a foreign country with food poisoning or tick bites, you’ll want non-emergency coverage, too.
Make side-by-side comparisons of different carriers and benefit levels. You may be surprised!
Private Health Services Plans/Health Savings Accounts :
This alternative to traditional group insurance plans for small business allows you to deduct 100% of your personal health and dental expenses.
Tax write-offs can save you up to 30% on healthcare costs. For small business owners without employees, this is significant.
Health spending accounts are set up through third-party administrators who specialize in these plans. A business might agree to fund an HSA for up to $2500 a year per employee. The employee takes his children to the doctor for asthma treatment.
The employee pays for the prescribed nebulizer, inhaler, and medications. The employee submits his receipts to a third party administrator who ensures the claim is legitimate and with within the amount funded by the employer.
The employee gets a cheque from the administrator for the full amount on a tax-free basis. The business gets a 100% tax write-off. The system works well up to the $2500 limit. Most medical procedures and devices are acceptable expenses.
For businesses with employees, PHSP/HSA provides flexibility unavailable in traditional group insurance plans. There are very few restrictions. Your employee could claim 100% of their child’s dental braces. These types of expenses are allowed.
Traditional insurance plans often have upper limits on certain procedures, an HSA offers 100% coverage on a wide range of expenses. Physical therapy, acupuncture, or an MRI are all eligible expenses.
When Group Insurance Is Superior :
PHSP are not ideal for every business. In fact, they are mostly used as a supplement to traditional group insurance plans. Certain businesses are limited to traditional group insurance only.
If your business is not incorporated and you have no employees other than yourself and family members, an HSA is not permitted. A group insurance plan is the best choice for your situation.
If you have a major catastrophic illness or accident, a group insurance plan is superior. The claim limits in a pooled risk (traditional) group insurance plan are much higher. Often the benefit cap is 10 times higher than an HSA!
Your HSA is limited by the employer contribution. When your employer contribution runs out there is no way to approve any more.
Ready to Search for the Best Insurance?
Staying competitive for talent is important. You spend time and effort attracting great employees. You need to retain them!
Start with a list of who you want to insure. Getting a quote from your current carrier is easy, but starting from scratch will take some time. Determine the kinds of benefits you will need.
Group insurance plans can start with a set menu of benefits or be offered to you and your employees to pick and choose.
Think about plan administration. Service may be more important than price to your bottom line.
If you are the only person doing office work, sales, management and you have 10 employees, how much time does that leave for insurance? You want to avoid time spent administering your plan.
For maximum flexibility and savings, consider an HSA in combination with group insurance. HSAs are meant for ongoing health maintenance. They excel at ongoing prescription costs, routine lab work, and things like regular therapy.
HSAs are a great way to limit a portion of health care costs while still providing benefits to your employees.
Purchase the Right Small Business Insurance Plans :
Start with an online search for “group insurance plans for small business” or similar to get you where you want to go. From there, many plans have online information and a feature for you to speak immediately with an agent.
Speak to your local agent and PHSP administrator about your needs. There is a custom solution for every business, regardless of size. It is their job to find the best product for you and your employees.
For more information and tips about running your own business, keep reading this blog!
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