American healthcare is famously obtuse and legendarily difficult to navigate. It is no small feat to organize your personal healthcare in America, let alone healthcare for your small business and its employees. When selecting a group health insurance plan for your small business, the number of options are often staggering, and it can be incredibly difficult to know if you are getting the best quality for the price package. As much as we would like there to be a quick and easy answer to health insurance, there isn’t. The best thing you can do as a small business owner is to educate yourself on the types of health plans on the market today and the most reputable providers. Once you’ve armed yourself with the key details, it may be easier to make a choice to address the unique needs of your small business.
What Health Plans are out There?
There are six main types of health insurance plans, all of which are available for small business group coverage. It is important to be well-versed in all plan types as even the most straightforward low-premium plan may end up costing more in the end if chosen for the wrong person.
Health Maintenance Organization (HMO)
Health Maintenance Organizations are plans that generally advise members to stay within networks to keep costs low. Even with network limitations, HMOs generally allow members to access more specialists and preventative care than with other plan types. Key things to know about HMOs:
- High out of network costs
- Generally lower premiums than most other plan types
- Primary Care Physician (PCP) almost always must recommend in order for members to see specialists
Preferred Provider Organization (PPO)
A preferred provider organization lets members go out-of-network much easier than HMOs but often in exchange for higher premiums. PPOs generally offer members more independence in picking their doctors and choosing what care they would like to receive. Key things to know about PPOs:
- Much larger provider network compared to HMOs
- Referrals not required to see specialists
- High premiums for group plans
High Deductible Health Plan (HDHP)
High Deductible Health Plans are a type of either HMO or PPO that often only begins to contribute after a high deductible is paid by the member. Unlike PPOs and HMOs copays do not apply; the insurance will only begin to pay in once a given deductible is reached. Key things to know about HDHPs
- Lowest HDHPs requires members to pay at least $1,300 before any level of contribution from insurance
- Can function either as HMO or PPO, so network size will vary depending on carrier
- After deductible is paid, insurance usually pays similarly to an HMO
Point of Service Plan (POS)
Point of service plans generally offer less choices to members in exchange for lower costs even compared to HMOs. Unlike HMOs, however, POS members can often still get out of network service. Key things to know about POS Plans:
- Very low deductible if service is in-network
- In-network procedures’ paperwork is handled by provider
- Sometimes requires referral from PCP in order to see specialists (varies by plan)
Flexible Spending Account (FSA)
Flexible Spending Accounts function differently from all above plans. FSAs are amounts of money set aside by an employee that is sometimes supplemented by the employer. The money in this account is then set aside for healthcare spending throughout a calendar year. Employees choose how much money to set aside at the beginning of each year.
- Limited to $2,750 per year
- Money is FSAs may be used for deductibles, copays and even prescriptions but not premiums
- For the most part, there is a use it or lose it component to this plan; however, $550 may be carried over each calendar year
Health Savings Account (HSA)
Health Savings Accounts are a type of HDHP that lets employees use untaxed money towards medical expenses. Since HSAs only apply to HDHPs, the money in employees’ accounts can be used for nearly every type of medical expense with the exception of premiums. Key things to know about HSAs:
- Contribution limit of $3,600
- Does not reset like FSAs (there is no use it or lost it component)
- Employees can open HSAs independent of employers
- Funds used for non-medical expenses are both taxed and likely to compound a penalty
Best Healthcare Providers for Small Businesses
UnitedHealthcare has the largest network of providers in the United States with individual plans for every state as well as Washington D.C. and Puerto Rico. UHC also has one of the most robust presences both in-person and online allowing plan-holders to select their PCP and specialists directly from their website. UHC offers several plans specifically for small businesses catering to companies with as low as 2 employees and as many as 5,000.
Most Popular Plans for Small Businesses
UnitedHealthcare Choice: UHC Choice is a classic HMO with competitive copays and great discounts for in-network care. Choice members, however, do not need a PCP to see a specialist, making the plan superior to most HMOs.
UnitedHealthcare Choice Plus: At a higher cost to employers, UHC Choice Plus allows employees to leave the already-massive UHC network at lower out-of-pocket costs and generally offers lower copays than standard UnitedHealthcare Choice.
Options PPO: UHC’s Options PPO allows members to use any doctor inside or out-of-network. When using out of network doctors, members often have to submit claims themselves in order to be reimbursed.
Bottom Line on UnitedHealthcare
As a business owner, UnitedHealthcare is likely the easiest provider to work with when it comes to organizing your group account as well as choosing a plan type. Because of UHC’s massive network size, your employees will have a great choice of provider as well. Compared to other providers on this list, however, UHC is likely to cost more for a group plan.
Blue Cross Blue Shield (BCBS)
Blue Cross Blue Shield is another massive health provider operating in all 50 states as well as D.C. and Puerto Rico. BCBS generally operates on a state-by-state basis meaning that the key points of health plans are likely to vary along those state lines. Within the BCBS network, however, are several effective group plans that are competitively priced and cater to all sizes of business.
Most Popular Plans for Small Businesses
Blue Select: Blue Select is a family of health plans that partner low-cost doctors and practitioners with equally low pay-in prices for employers. Blue Select functions like an HMO, rewarding in-network care with low copays and out-of-pocket expenses.
BlueCard PPO: The BlueCard PPO is available in the entire contiguous United States and allows members to access out-of-state care at no added charge. BCBS’s PPO plans allow members access to as many as 600,000 network doctors and 6,000 hospitals making the plan especially lucrative for small businesses with traveling employees who may seek out-of-state care.
Bottom Line on Blue Cross Blue Shield
Blue Cross Blue Shield generally costs less than other big-name providers like UnitedHealthcare while offering comparable care. Setting up a group plan, however, is notably more difficult because of BCBS’s lesser web presence. The varying quality of plans on a state-by-state basis means that business owners will often need to do quite a bit of research to see if BCBS is the right choice in their area.
With a multi-century history of operation in the United States, Aetna is recognized as a reliable and high-value healthcare provider. Aetna is often cited as being the preferred choice of small businesses with less than 50 employees because of unique savings opportunities.
Most Popular Plans for Small Businesses
Aetna Funding Advantage (AFA): Aetna Funding Advantage functions like a Health Savings Account in that employers pay a maximum claim amount from which employees can then use for insurance. Once that claim amount is spent, stop-loss insurance begins. Also similar to an HSA, 50% of surplus money still in the account after a calendar year is returned to the business owner.
Aetna Open Access HMO: Unlike traditional HMOs, members do not need a PCP’s referral to see a specialist on Aetna’s Open Access HMO.
Bottom Line on Aetna
Aetna is a great lower-cost health insurance provider, but Aetha network of hospitals and providers tends to be spotty. Before signing up, be certain that your PCP and hospital of choice are still in-network. Compared to carriers above, Aetna has the granular information on their websites that small business owners are likely looking for, but you’ll likely have to get on the phone with a representative to find out if their plans work well in your area.
As their name implies, Humana puts an especially human spin on the sometimes-mechanical health insurance selection process. Humana is widely regarded to have one of the best customer service teams in the healthcare industry. Similar in scope to Aetna, research is likely necessary to see if Humana’s well-priced plans will apply in your state. Humana group plans for small businesses traditionally cap at 50 employees, but plan guidelines vary state-by-state.
Most Popular Plans for Small Businesses
Humana Canopy: Humana Canopy is a great option for employees who do little more than annual physical check-ups. Preventative care is also fully covered on Canopy, but out-of-network and especially out-of-state care is often not covered.
Humana Efficiency: Humana Efficiency has the lowest premiums compared to any other Humana plans and one of the lowest in the industry. Low premiums, however, equate to high out-of-network costs.
Bottom Line on Humana
If your small business has less than 50 employees, Humana is likely a great economic choice. Even Humana’s least comprehensive plans still cover preventative care, and their more inclusive plans are great for in-state care.
If you are lucky enough to be in one of the eight states (Hawaii, Washington, Oregon, California, Colorado, Maryland, Virginia, Georgia and Washington D.C.) which offer Kaiser Permanente health plans, it is well-worth looking into their offerings for small business-oriented group plans. All Kaiser plans offer extremely competitive premiums for often identical or even superior care. Since Kaiser plans vary so much by state, our overview will focus on the general details of their most common plans.
Kaiser Traditional HMO Plans: No matter which state, Kaiser Traditional HMO plans offer competitive copays and $0 deductibles making them especially helpful for employees that may face chronic health issues or regular non-PCP visits. Almost all Kaiser HMO plans require members to get referrals from PCPs to see specialists.
Kaiser Deductible HMO Plans: Deductible HMO plans from Kaiser function in a way similar to most other carriers’ own traditional HMOs. This style of plan has lower premiums but requires members to pay into a deductible when not seeing a PCP or specialist.
Kaiser PPO Plans: Being that PPO plans are especially useful for out-of-network visits and Kaiser is a very localized provider, PPO plans from Kaiser are likely only helpful for small businesses with very specific needs. If you have a company in a Kaiser-supported state, it is very likely a majority of that state’s providers are within their HMO network. A good example of a Kaiser PPO plan being helpful is if you have employees who split time between Kaiser-supported and not Kaiser-supported states.
Kaiser Point of Service Plans: Kaiser’s POS plans are a great middle ground between HMO and PPO that allows more care options than HMO plans and a deductible often costing between Traditional and Deductible plans. Compared to Kaiser PPO plans, Kaiser POS plans often have lower premiums and offer similar service.
Untangling the Knot of Group Health Insurance
It would be fantastic if there was a “number one” choice for group health care that worked for every small business; but, like small businesses themselves, all plans and packages are different. Finding the best health care plan for your small business requires a business owner to consider three key factors: which state your company is based in, how many employees you have and most importantly, the overall costs. Depending on any of these factors, the answer of the “best provider” could be completely different for two companies. Knowing the key plan types as well as the most reputable providers, however, gives any business owner the tools to choose the best provider and plan type for their employees.