How to Find Small Business Health Insurance
Small businesses have struggled in the weak economy, and many of them have had to close their doors. One of their principle struggles has been finding insurance for their employees, but many have found it to be cost-prohibitive. Finding the right insurance may take some work, but will retain good employees.
The difficulty facing small businesses
Small businesses have trouble finding health insurance for their employees for two main reasons:
- Limited revenue. Small businesses do not have the capital that larger businesses have, and often have trouble affording the percentage of the health insurance premium they have to pay for most insurance programs. This is usually at least 50 percent on most major medical programs.
- Limited access. Most insurance programs calculate their premiums based on the number of employees (called "lives" in the insurance industry) the company has. Because small businesses have fewer employees, they do not have access to the rates available for larger employers.
Additional options for small businesses:
Small businesses have sought to find some kind of insurance for their employees, despite the difficulties of affording major medical insurance and meeting the requirement for number of employees.
- Supplemental insurance. Supplemental insurance is available through companies like Colonial, Aflac and others. These policies offer hospital indemnity insurance, which pays directly to the employee if they have to go to the emergency room, doctor's office, etc. Because the employees pay directly for their policies, it costs the employer nothing. The supplemental providers also write policies for smaller groups than the major medical providers (as few as three employees).
- Major medical for executives. Some companies, faced with the affordability problem, have sought to insure only the executives and key employees. This way, they can better afford to fund the percentage they have to meet (roughly 50 percent in most cases) for the major medical policies.