Small Business Health Insurance

Small business health insurance benefits employers and employees alike. If you own a business you can save on personal health care costs, increase tax deductions, and boost job satisfaction with a group health insurance policy.

This page:

  • Explains how small business health insurance works

  • Helps you design a small business health insurance plan

How a small business health insurance plan can help

If you own or belong to a business or organization of between 2 and 50 people, chances are you qualify for (and would benefit from) a group health insurance plan.

Small business health insurance has lots of benefits. Besides providing medical care for yourself and your employees, a small business health insurance plan helps spread the financial risk between all the members, which usually means lower premiums and more extensive coverage for everyone.

But group health insurance has tax advantages too. Employer contributions to a small business health insurance plan are generally 100% tax deductible, and employees save on payroll taxes.

Small businesses (and certain organizations, like non-profits) are generally eligible for group health insurance so long as they can show two or more full-time taxable employees.

How group health insurance works

A small business health insurance plan provides its members with a set coverage with rates calculated using the group and indivuduals. Employees may be able to add policy riders and additonal coverage to fit their specific needs, but the basic policy format will remain the same.

Likewise, although small business health insurance comes in a varierty of shapes and sizes (fee-for-service, HMO, PPO, POS), the format that's chosen will apply to all members. (And although it is technically possible to purchase a group indemnity policy, the managed care plans are much more common.)

Although rate calculations vary both from state to state and from company to company, the cost of a group health insurance plan is based on the characteristics of each memeber, including:

   age,
  health status
   occupational hazard
   business and/or residential location.

Employees of a business that offers group health insurance are not compelled to join the plan, but the group must maintain a minimum number of insured (as few as 2 people, depending on the policy) to guarantee coverage.

Sidebar
No insurance company in any state can refuse to sell you small group health insurance if they offer coverage to other small groups. Find out about the rules and protections applicable to small group insurance in your state by reading our state health insrurance guides.

The cost of small business health insurance

So what about the bottom line? Well, group health insurance is less expensive than a bunch of individual policies bound together, but it's not cheap. No health care in America is.

Depending (again) on the state and the insurer, you, as the employer, will be required to pay some percentage of an employee's individual premium (often often 25% or 50%). If the employee wants to extend coverage to a spouse or dependant, you may choose to pay a percentage of that cost, but that's not required. You'll probably have a lot of policy and payment options to choose from. Getting right to that . . .

Designing a small business health insurance plan

To get an accurate quote on a small business health insurance policy, you'll need some reliable information about both the type of coverage you seek and about the vital statistics of the group members who want to be insured (including the number of dependant they'd like to include).

If you don't have all the right info on hand, don't worry. You can use estimates to shop quotes, and fill in the gaps as you continue the prosee. Just keep in mind that the more accurate the info, the more accurate the quote.

If you'd like to start shopping, try Ehealthinurance, the web's largest health insurance marketplace. Their application process is fairly simple, and they offer lots of help should you run into problems. And, you can save your application and return to it later (and later and later.) Try them now.

Or, for more information about small business health insurance rights and regulations in your area, take a look at our state guides to group health insurance.

If you need to brush up on the basics ("What's a PPO?"), we've got several guides, including the basics of medical insurance, and choosing a health plan. Good luck!