About Small Business Group Health Insurance

Small business health insurance covers the medical needs of employees. It is also a great way to provide an additional draw for prospective workers. The cost of this insurance can be quite high, and many company owners have to spend a large chunk of time researching the insurance options available to them.

Function

Small business group health insurance provides medical, dental and vision coverage at a cost to employees. These health plans tend to be less expensive for the employee than getting a private insurance policy. A small business that can provide health insurance coverage has an advantage over competitors that cannot provide coverage because this benefit is so costly for employees to provide on their own.

Types

The two primary types of small business group health insurance are HMO and PPO. An HMO, or health maintenance organization, has hefty restrictions on who patients can see and the services rendered. A PPO, or preferred provider organization, plan is more open in terms of the providers that a patient can see. A PPO plan typically costs a good bit more than an HMO.

Misconceptions

Many employees are not aware of the heavy cost of this insurance plan to business owners. Most owners cover half or more of the premiums, which can be a major expense for a small business. The companies also tend to pay various administrative fees, including the hiring of a human resources staff member, to have an insurance plan. The choice not to offer insurance typically comes because companies cannot afford to pay the associated costs.

Warning

Small business group health insurance premiums are more susceptible to major claims than large business policies. For a small business, two cancer claims throughout the year or more than a couple of childbirths means the claims go up significantly. The insurance company makes less money, and the cost is passed on in higher premiums. This danger is significant for small businesses, making paying for insurance a tough balancing act for small business owners.

Potential

Many small businesses can go in with other small businesses to get a better deal. Because insurance premiums are based in part on the number of people in the plan, more people means a better rate. Many small business owners get together with others for a brokered insurance plan that covers the employees of several companies.