Health Insurance for Small Business Owners

America’s small business owners often feel that they are in a difficult situation when they seek health insurance for themselves and their employees. They are not in the same position as large businesses and corporations, which receive cost breaks in providing health insurance for their workers. In fact, when a small business and a large business purchase the same coverage plan, the small business pays an average of 18 percent more.

Small business owners also understand the importance of finding insurance for themselves, their families, and the people they employ. High-quality, affordable health insurance for small business owners in the US is not out of reach; these business owners simply need to explore their best options before making this important decision. Small business owners should also be aware that under the Affordable Care Act of 2010, they may qualify for a tax credit that will counterbalance some of their health insurance costs.

Group Insurance

Group insurance remains one of the top options in health insurance for small business owners in the US. This is a type of insurance agreement in which a number of small groups are pooled together, essentially forming a large purchasing group. A group agreement reduces the insurance premium for each participating party by splitting the cost of the premium among all of the parties involved.

A number of states have mandated group insurance agreements as an option for small business owners, self-employed workers, and any other individuals who may be interested in such plans. Such states include New York, Texas, Ohio, Arkansas, Kansas, New Mexico, Montana, and Wisconsin. Small business owners in states that do not have mandated group agreements can typically access group agreements that people in the private sector have established.

Reinsurance

A variety of insurance policies fall under the “reinsurance” umbrella. Reinsurance policies are all designed to offer lower premiums. They are meant to benefit small business owners, as well as individuals who are considered low-income. They usually offer cost relief in the form of subsidies or purchasing pools; however, some reinsurance policies transfer costs to third parties. These third parties include actual reinsurance carrier companies, reinsurance pools, and state governments. Unfortunately for many small business owners, not every state offers reinsurance programs. States that do offer such programs include New York, Connecticut, Massachusetts, New Hampshire, Idaho, Arizona, and New Mexico.

Health Savings Accounts

Health savings accounts (HSAs) became an insurance option for small business owners in 2003, when President George W. Bush signed them into law. They are a unique combination of a high-deductible insurance policy and a savings account. The money in a health savings account is non-taxable and can only be used for medical expenses.

Small business owners can contribute money to their employees’ HSAs at their own discretion. In some cases, employees are completely responsible for the savings portion of their HSAs; in other cases, employees’ savings accounts consist of contributions from the individual employee and his or her employer. Regardless of how a much a small business owner contributes to his or her employees’ HSAs, the HSA option reduces the owner’s insurance costs and allows employees to set money aside for medical costs they may face in the future.

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