American business owners often have first-hand experience on how essential the health of their employees is. A healthy workforce is especially impactful for small businesses, which may need more financial safety net or franchise footholds of larger businesses to weather periods of employee absence.
However, business owners can protect themselves with small business health insurance, which can help to keep employees healthy without compromising a small, growing company’s potentially fragile finances.
Insurance can feel complex—and doubly so in the business context. Here is an overview of small business health insurance, how it works, and why small businesses should be careful when selecting.
Small Business vs. Big Business
Business ownership and health insurance are two complicated fields. Owners looking to purchase small business health insurance for their employees may wonder if they qualify. “Small business” can be a vague term, and the difference between small business insurance and large business insurance is substantial.
The defining features of a small business vary depending on which insurer the business owner selects. Some will define a business’s size by the number of employees, with an average upper limit between 50 and 100. Others may base their eligibility criteria on the revenue of the business, with annual revenues lower than $5 million in most cases.
These definitions can conflict, so choosing an insurer who works individually with clients to create customized insurance strategies is important. It is less risky for brokers to insure small businesses, so their coverage plans will generally cost less and offer more with greater flexibility to address your specific needs.
The Applications of Small Business Health Insurance
Health insurance provides financial protection from physical injuries and illnesses in exchange for monthly or yearly premiums that usually cost less than the medical bills. However, small business health insurance is applied a little differently. It has to be, as it covers more people, and its premiums are paid collaboratively.
Payment for premiums is a joint effort between the employee who is being insured and their employer. The employer must pay for at least fifty percent of the employee’s premiums, and they can contribute to the premiums of the employee’s dependents.
Unlike many independently acquired health plans, the small business health insurance bought with these premiums will almost always ensure coverage. Other health plans might encounter conflicts with pre-existing medical conditions or income limits that prevent coverage, but this is fine with small business health insurance.
Small business health insurance is also more malleable than traditional plans. Business owners can shop around and purchase insurance at any point rather than just during marketplace open enrollment. Once a plan is purchased, it will likely lock the business in for at least a year. Business owners can add or drop coverage as they gain and lose employees.
Is Health Insurance a Requirement for a Small Business?
Part of what makes insurance a difficult field to understand to the non-industry observer is the variety of forms insurance law can take between states and sometimes even between individual counties.
There have been attempts to increase health insurance access in America by legally mandating that businesses guarantee it for their employees. Still, the presence of these mandates is sporadic, and they may not apply to every small business.
Laws mandating business health insurance are typically limited to businesses with over 50 employees. Thus, small businesses with fewer members likely have no legal obligation to insure their workers. And while this may be a tempting method of conserving money, small business health insurance can be advantageous.
The Advantages of Small Business Health Insurance
It is beneficial for a business to have healthy employees, especially in industries that cannot function without in-person workers, such as medical facilities. However, health insurance can increase employee retention beyond the short-term advantage of employees well enough to work. When employees feel provided for, they are more likely to stay, and the quality of their work increases.
There are also financial reasons to choose small business health insurance. Acquiring health insurance as a group will result in lower monthly premiums, especially if the business has enough employees to secure a lower rate. Additionally, the money spent on business insurance premiums is often tax deductible, saving small businesses money come tax season.
Learn More About Small Business Health Insurance From a Trusted Provider
Small businesses may not always have a mandate to provide health insurance, but it benefits them to do so in most cases. However, it is only possible to understand exactly which details, coverages, exclusions, and opportunities a health insurance plan can provide to a small business by collaborating with an insurer.
The professionals at Burton & Company can help your business explore its options for health insurance suited to your size and number of employees. Contact Burton & Company to discuss small business insurance plans.