Health Insurance Options for Small Businesses

Small business owners may or may not have individual health insurance. However, small businesses can benefit from a group health insurance plan for their employees. Businesses can generally tax-deduct 100 percent of their premiums on qualifying group health plans and potentially reduce their payroll taxes. Employees pay their portion of their monthly premiums with pre-tax dollars.

Group Health Insurance

• Group health insurance is employer-sponsored health coverage for business owners, their dependents, employees and sometimes for the dependents of employees. The purpose of group health insurance is to cover employers, employees and their families; protect employees from being declined due to medical history; assist the company with hiring and retaining the best employees; and give the employer a tax deduction for premiums paid.

Business HSA

• Business Health Savings Accounts (HSAs) help an employer to assist employees with health care costs at an affordable rate. Employees purchase their own plan, which includes an HSA, and the employer contributes pre-tax dollars. Those funds can be used to pay for qualified medical expenses or left in savings.

Dental

• Dental PPO (Preferred Provider Organization) plans offer a network that offers a balance between lower costs and dentist choice. Dental Health Maintenance Organization (DHMO) plans, also referred to as pre-paid plans, require you to choose one dentist or dental facility to coordinate all of your oral health needs.

  Fee-for-service plans, also known as indemnity or traditional plans, typically offer plans requiring covered persons pay a certain percentage for each service (called coinsurance) and the plan pays the rest. The percentage usually varies by the type of coverage, such as diagnostic and preventive, major services, etc.

  Last but not least, dental discount plans are not insurance. Some dentists (called participating providers) have agreed to accept a discounted fee from plan members as full payment for services performed.

Vision

• Once a corporate perk, vision insurance has now been made available and affordable for small businesses. Group vision insurance, a separate form of group health insurance, is now commonly found in employee benefits plans. It is either a vision benefits package or a discount vision plan, same as the dental discount plan. The cost of group vision is generally lower than for individual vision policies because administrative expenses are decreased.

Do You Qualify?

• Generally speaking, small businesses eligible for a small business insurance plan will need to meet the following criteria: have at least two full-time owners, officers, partners and/or employees, as filed on the appropriate state quarterly wage and tax statements or annual federal tax returns; be a legitimate business entity as shown on the business license or fictitious name filing, in the articles of incorporation or the articles of organization, for limited liability companies; and meet the minimum employer contribution percentage set by the insurance company. Eligibility criteria varies from state to state.