Choosing to get small business health insurance is a big step for you and your business.

Although it might seem like a huge cost to shoulder, we have some tips for you on finding the best cheap health insurance that still has quality benefits for those enrolled in the plan.

Here’s what there is to know about cheap health insurance for small businesses.

The importance of health insurance for small businesses

Providing health insurance for small businesses is not just a perk—it’s a strategic investment in the well-being of your employees and the long-term success of your company. In today’s competitive job market, offering comprehensive health coverage can be a powerful tool for attracting and retaining top talent, fostering employee satisfaction, and boosting morale. Moreover, access to affordable healthcare can enhance employee productivity, reduce absenteeism, and promote overall workplace wellness. Small businesses play a vital role in their communities, and by prioritizing employee health insurance, they demonstrate a commitment to supporting the physical and financial well-being of their workforce, contributing to a healthier and more resilient society. Let’s explore further the significance of health insurance for small businesses and how it can positively impact both employees and employers alike.

Benefits of providing cheap health insurance to employees

Small business health insurance may be beneficial to both the employer and the employee. It is critical to compare plans and find small business health insurance that works for your employees. There are a number of potential benefits to providing affordable health insurance to your employees, including:

• Lower costs: When purchased as group health insurance, costs are much lower than if an employee must purchase coverage on their own.
• Better employee retention: Employees are more likely to stay at an employer that offers them health insurance than those who do not. This can lower employee turnover and improve overall employee satisfaction.
• Improves hiring: If employees have to choose between a company that offers health insurance and one that does not, they are more likely to turn to the company with healthcare options. Sometimes, health insurance matters just as much to employees as wages.
• Tax benefits: There are tax incentives for business owners who offer employee health insurance. That may help offset some of the costs related to this purchase.
• Better company culture: Overall, employees feel more valued and appreciated when their employer provides access to benefits focused on their health and wellbeing.

Additionally, helping employees stay healthy through preventative care, which could reduce missed time at work, is beneficial for your business. Employees may also be more productive, as having access to medical care can encourage them to visit providers on a regular basis. Plus, having health insurance can relieve stress associated with dealing with medical costs when they do come up.

Understanding different types of cheap health insurance plans

Navigating the realm of cheap health insurance plans can be daunting, yet essential for individuals seeking affordable coverage without sacrificing quality care. With a myriad of options available, understanding the different types of cheap health insurance plans is crucial for making informed decisions that align with both budgetary constraints and healthcare needs. In this section, we’ll explore various types of cost-effective health insurance options, highlighting their features, benefits, and considerations to help individuals find the right plan that strikes the perfect balance between affordability and coverage.

Types of cheap health insurance plans for small businesses

Types of cheap health insurance plans for small businesses:

1. Traditional Group Health Insurance: Traditional group health insurance plans are offered by insurance companies and provide coverage to employees of small businesses. These plans typically offer comprehensive coverage, including preventive care, hospitalization, and prescription drugs. While they may have higher premiums compared to other options, they often provide the most extensive coverage and benefits.
2. High-Deductible Health Plans (HDHPs): HDHPs feature lower monthly premiums but higher deductibles compared to traditional plans. These plans are coupled with Health Savings Accounts (HSAs) or Health Reimbursement Arrangements (HRAs), allowing employees to save money for medical expenses tax-free. HDHPs are suitable for employees who are generally healthy and prefer to pay lower premiums while maintaining coverage for catastrophic events.
3. Health Maintenance Organizations (HMOs): HMOs emphasize cost-effective care by requiring employees to select a primary care physician (PCP) and obtain referrals for specialist care. These plans typically have lower premiums and out-of-pocket costs compared to other options but limit coverage to in-network providers. HMOs are ideal for businesses seeking predictable costs and comprehensive coverage within a network.
4. Preferred Provider Organizations (PPOs): PPOs offer greater flexibility in choosing healthcare providers compared to HMOs. While they have higher premiums and deductibles, employees can access both in-network and out-of-network providers without referrals. PPOs are suitable for businesses whose employees prefer a broader network of providers and are willing to pay higher premiums for increased flexibility.
5. Catastrophic Health Insurance Plans: Catastrophic plans are designed to provide coverage for major medical expenses after a high deductible is met. These plans have the lowest premiums but come with high deductibles and limited coverage for routine care. They are typically chosen by individuals who are young, healthy, and seeking protection against unforeseen medical emergencies.

Differences in cost and coverage between these plans vary based on factors such as premiums, deductibles, copayments, and network restrictions. Employers should carefully evaluate each option’s pros and cons to select the most suitable cheap health insurance plan for their small business and employees.

High-Deductible Health Plans (HDHPs) and Health Savings Accounts (HSAs)

High-Deductible Health Plans (HDHPs) and Health Savings Accounts (HSAs) are two interrelated components of healthcare coverage that offer a unique approach to managing healthcare expenses. HDHPs are health insurance plans characterized by lower monthly premiums and higher deductibles compared to traditional plans. These plans typically require policyholders to pay a higher out-of-pocket amount before insurance coverage kicks in for most medical expenses. On the other hand, HSAs are tax-advantaged savings accounts designed to accompany HDHPs. Contributions to HSAs are made on a pre-tax basis by both employers and employees, and funds can be used to pay for qualified medical expenses, such as deductibles, copayments, and prescriptions, tax-free.

Benefits of HDHPs and HSAs:

1. Lower Premiums: HDHPs generally feature lower monthly premiums compared to traditional health insurance plans, making them an attractive option for individuals seeking to reduce upfront healthcare costs.
2. Tax Advantages: Contributions to HSAs are tax-deductible, reducing the policyholder’s taxable income. Additionally, funds in HSAs grow tax-free, and withdrawals for qualified medical expenses are not subject to federal income tax.
3. Flexibility and Control: HSAs offer flexibility in managing healthcare expenses, allowing policyholders to use funds as needed for qualified medical costs. Unused HSA funds can be rolled over from year to year, providing a long-term savings opportunity for future healthcare needs.
4. Consumer Engagement: HDHPs and HSAs encourage consumer engagement in healthcare decision-making by giving individuals more control over their healthcare spending. This can lead to greater awareness of healthcare costs and more informed choices regarding medical services and treatments.

Potential Drawbacks of Choosing HDHPs and HSAs:

1. Higher Out-of-Pocket Costs: HDHPs typically have higher deductibles and out-of-pocket expenses compared to traditional health insurance plans. This can result in significant financial burdens for individuals who require frequent medical care or have chronic health conditions.
2. Limited Coverage for Preventive Care: While HDHPs are required to cover preventive services at no cost to the policyholder, other non-preventive medical expenses may not be covered until the deductible is met. This may discourage individuals from seeking necessary medical care.
3. Risk of Underfunding: Policyholders must ensure they have sufficient funds in their HSAs to cover potential medical expenses, as insufficient funding could lead to financial strain or delays in accessing care.

In summary, HDHPs and HSAs offer cost-saving opportunities and tax advantages for individuals willing to take on higher out-of-pocket expenses. However, careful consideration of one’s healthcare needs, risk tolerance, and financial situation is essential when choosing these options to ensure they align with individual circumstances and provide adequate coverage.

Factors affecting the cost of small business health insurance

Several factors influence the cost of health insurance for small businesses, impacting both premiums and out-of-pocket expenses for employers and employees alike. Understanding these factors is crucial for small business owners to effectively manage healthcare costs and select appropriate insurance plans.

1. Number of Employees: The size of the workforce plays a significant role in determining insurance costs, as larger groups may qualify for lower premiums due to economies of scale and risk pooling.
2. Location: Healthcare costs can vary significantly by geographic region due to differences in healthcare provider pricing, state regulations, and market competition. Businesses located in regions with higher healthcare costs may face increased insurance premiums.
3. Industry and Employee Demographics: Certain industries and employee demographics may pose higher risks and healthcare utilization rates, influencing insurance premiums. For example, industries with physically demanding jobs or older employee populations may incur higher healthcare costs.
4. Coverage and Plan Options: The scope of coverage and plan features selected by the employer, such as deductibles, copayments, and provider networks, directly impact insurance costs. Comprehensive plans with lower deductibles and broader coverage typically come with higher premiums.
5. Employee Contributions: Employer contribution levels and cost-sharing arrangements between employers and employees can affect overall insurance costs. Higher employer contributions may result in lower premiums for employees but higher costs for employers.
6. Health Status of Employees: The health status and risk profile of employees can influence insurance costs, as healthier populations may result in lower claims and premiums. Conversely, businesses with employees with pre-existing conditions or higher healthcare utilization rates may face higher insurance costs.
7. Regulatory Requirements: Compliance with state and federal regulations, such as mandated benefits and minimum coverage standards, can impact insurance costs. Businesses may incur additional expenses to meet regulatory requirements.

Overall, small businesses must carefully evaluate these factors and consider their budgetary constraints, employee needs, and long-term financial goals when selecting health insurance plans. By understanding the drivers of insurance costs, small business owners can make informed decisions to optimize coverage and manage healthcare expenses effectively.

Tips for finding cheap health insurance for small businesses

1. Understand the basics of small business health insurance plans

Group health insurance doesn’t have to be difficult to understand. If you take the time to learn a few basic health insurance terms, you may find that shopping for and understanding small business health insurance becomes a lot easier. On eHealth, you can find definitions of important health insurance terms such as premiums, deductibles, copayments, and out-of-pocket limits. When you know what insurers mean by these words, you can start comparing policies confidently.

2. Compare insurance companies to find cheap health insurance that gives you a good value

Premiums may vary due to the benefits you select, the average age of employees, the size of your company, and even your ZIP code.

You should shop around for the best plan for your needs, since there is most likely a wide variety of insurance companies and plan types offered in your area. You can pull up competitive quotes within seconds by entering your ZIP code and company size on the small business quote page at eHealth.

3. Find out what your employees want

Usually when a small business chooses to offer small group health insurance, the owner is required to contribute at least 50 percent of the premiums for employees.

Since employees will also be contributing to paying for the plan, they probably want a say in what the employer is offering. If small business owners have flexibility with which plan they can offer, it may be a good idea to see what employees value the most in a health insurance plan. As you compare plans, you can survey your employees to learn about their expectations.

4. Understand how to offset premiums for small business health insurance plans

Businesses with fewer than 25 employees may qualify for tax credits that can help offset the cost of the premiums.

To qualify for these health insurance subsidies, you also need to pay at least half the premium, pay an average wage of less than $50,000, and purchase a SHOP policy from the government’s website or a licensed broker.

Even if you can’t get a tax credit, you should still have the chance to deduct your company’s share of the premiums. When you can take tax credits and deductions, finding cheap health insurance for your company may be easier than you thought it would be.

5. Consider the ways your business can benefit

Employers that offer health insurance have a competitive advantage when it comes to recruiting and retaining employees. Giving employees access to good medical care can also minimize sick days and turnover while improving productivity.

Certainly, buying small business health insurance plans will cost your company some money, but you may find that it’s a great investment. Besides, you and your own family can also benefit from having group coverage.

What to look for in Small Group Health Insurance

When purchasing small business health insurance, there are a few key things to look for in any plan and policy before making a buying decision. When choosing affordable small business insurance, start by comparing plans based on the following:

• Does the plan offer competitive coverage from local medical providers, hospitals, and other service providers? Employees have a wide range of needs when it comes to their healthcare.
• Determine what the options are for individual or family health insurance. Be sure policies are affordable to you, whether you cover the cost fully or split it with your employees.
• Compare policies based on what they cover, including deductibles, co-pay requirements, and out-of-pocket expenses. Determine what the maximum amount paid out on the policy is.
• Find out if dependents are covered, if policies offer eye exams and dental care, as well as whether policies include prescription medication coverage.

Closing evaluating healthcare coverage options for your employees will help ensure you’re providing the most value while also staying within your budget.

Where you can buy Small Group Health Insurance

When looking for affordable health insurance for your small business, you have several options to consider in terms of where to buy coverage. You can buy from:

• The insurance provider directly: This allows you to see all policies a single provider offers and choose which one is best for you.
• An insurance broker: An insurance broker represents one or a handful of insurance companies and may be able to help you select between those options.
• Small business health options program: This is an insurance exchange created under the Patient Protection and Affordable Care Act. It allows small businesses to shop for, compare, and purchase coverage for their employees.
• Professional employer organization: A professional employer organization (PEO) provides full-service human resource services for a company. That organization could help you to secure health insurance for your employees.
• eHealth: You can also use eHealth to shop and compare small business group insurance policies with ease. Use our tool to compare policy features and costs, or you can speak with one of our licensed insurance agents who can help you navigate the process and find the best plan for both you and your employees.

Whichever route you take, it’s worthwhile to take your time shopping around to find the most affordable health insurance for your small business.

FAQs about cheap health insurance for small businesses

How much does group health insurance cost for small businesses?

Small business health insurance costs range widely based on the type of plan selected, location, and other factors. According to the 2023 Employer Health Benefits Survey from the Kaiser Family Foundation, the average cost of health insurance for a family was $23,968. Of that amount, workers on average paid $6,575 toward the cost of their coverage. The report also states that the average deductible for a single person was $1,735.

Keep in mind that how much employers pay differs significantly.

How many employees does a small business need to have to provide health insurance?

No business is required to provide coverage to their employees. However, some businesses with over 50 full-time employees—or the equivalent to full-time employees—need to provide health insurance. If they fail to provide health insurance that meets the minimum standards under the law, they may be subject to paying an employer shared responsibility payment. No company under 50 employees is responsible for this.

It’s also worth noting that you can have as few as one or more employees and qualify for small group insurance. So, if you’re a small startup that wants to offer coverage to your employees, you can.

Start shopping for cheap health insurance for your small business

At eHealth you can find cheap health insurance plans for individuals, families, and small businesses. Besides medical plans, you can also find policies that help pay for dental, vision, and other healthcare needs. Start shopping today by selecting the right health insurance quote form and comparing your options.