Top Health Insurance Plans and Options for Small Businesses

Self-funded plans give the business owner control over the distribution of benefits, and also provide the employer with the flexibility to design an individualized health insurance benefit plan. One major factor that has been designed for small businesses using self-funded health insurance plans is the monthly accommodation. Self-funded plans offer a high level of flexibility and customization, allowing small businesses to select from an array of benefit plan configurations and administration options. Self-funded plans can be great options for smaller businesses that need relief from rising health insurance costs.

To address the challenges of self-funding for the small employer, insurance companies have responded with hybrid funding plans, combining the best features of self-funded plans and fully insured health plans. The plans have level premiums for the entire 12 months of the plan year, just like fully-insured plans. The premium pays for plan administration, reinsurance, and expected claims funding. Hybrid funded health insurance plans were created for small employers with healthy employees who want to save money on their group health insurance plan without sacrificing benefits.

This is a savings account that is used for medical expenses and is funded by pre-tax dollars. Using pre-tax dollars simply means that the employees will show that they have less income and will, therefore, have fewer taxes withheld. The employee decides the amount of contribution to the account each year.

As the name implies, this plan is designed such that the employer reimburses the employee for health care. HRAs are slowly becoming a popular option because of the kind of control it gives small businesses.

The purpose of SHOP is to allow smaller businesses, which generally pay higher overhead costs for obtaining insurance, to have access to better quality coverage for their employees at lower costs. The SHOP marketplace is available to businesses with up to 50 full-time equivalent employees.

The employer contracts with a PEO to provide outsourced services in payroll, human resources, employee benefits, and tax compliance. Depending upon the cost savings per service, an employer can implement some or all the offered PEO’s services. The PEO will manage all federal and state employee-related compliance including payroll taxes, human resource assistance, OSHA, and ACA.

As part of the health care reform law, small businesses that opt to provide health insurance benefits to their employees may be eligible for an increased Small Business Healthcare Tax Credit to help offset the cost of offering insurance. As of 2014, businesses with fewer than 25 full-time equivalent employees that pay annual wages of less than $50,000 per employee; contribute 50% or more towards the employee’s self-only health insurance premiums; and participate in the Small Business Health Options Program (SHOP) may be eligible to claim a 50% tax credit.