HEALTH INSURANCE FOR SELF-EMPLOYED AND SMALL BUSINESS
Building a successful business is hard work. Finding the affordable, quality health insurance you need doesn’t have to be. Whether you’re self-employed and working out of your garage or the owner of a small business with multiple employees, you face special challenges when it comes to finding and getting health coverage. The purpose of this page is to answer your questions, assess your needs, and provide you with the right tools to find the best health insurance solution for you.
Give your employees real choices
You can offer your employees real, meaningful choices to meet their lifestyles needs - everything from life insurance with long-term care, to accident and disability insurance, financial planning and wellness and even pet insurance.
Group Health 101
Different people have different health insurance needs, and those needs can change over time. The needs of self employed persons may differ from those who own and operate small businesses with multiple employees – but today’s self-employed person may be tomorrow’s small business owner. With these differences in mind, this guide begins and ends by providing guidance and answering questions relevant for both self-employed persons and small business owners. In between, however, we’ve created segments specially crafted to address the particular needs of each group.
We’ll start by discussing the value of health insurance, the types of products to consider, and the key concepts and terms that both self-employed persons and small business owners should be familiar with. We’ll also discuss some of the specific provisions of the Affordable Care Act (also called the "ACA" or “Obamacare”) and what they mean for self-employed persons and small business owners today.
Next, we’ll look at the challenges and choices facing self-employed persons, that is, persons in business for themselves or working on a consultant basis, without employees. We’ll explain, step by step, how self-employed person’s can find and purchase the best health plan for their needs.
In the following section, we’ll discuss the special challenges and choices facing small business owners with 1-25 employees. We’ll walk you step by step through the process to learn how small business owners can find and purchase the best health plan for their needs.
In the final section, designed for both self-employed persons and small business owners, we’ll provide a glossary of additional health insurance terms, as well as references to other valuable health insurance resources.
The Value of Health Insurance
In order to make a smart health insurance buying decision it helps to understand the value of health insurance and why you need it. It may sound obvious, but many people don’t properly understand the basic purpose of health insurance or how it works. In brief, health insurance helps protect self employed persons and small business owners in the following ways:
1. Health insurance protects your finances
It entitles you to discounted rates for medical care:
Insurance Companies negotiate rates with health care providers. Without coverage, the fee charged for a regular office visit can be much higher, possibly twice as high in some cases.
It shields you from unexpected medical costs:
Even if your health plan requires you to pay certain costs out of pocket, being covered can help save you from bankruptcy in case of injury or hospitalization.
It can protect you from ACA tax penalties:
So long as you maintain qualifying coverage without an unpermitted gap (generally a single gap of up to two months in a year is permitted), you should not face an Obamacare tax penalty.
2. Health insurance protects your health
It improves your access:
As a member of a health insurance plan, you have access to a network of health care providers.
It provides you with critical care:
When you're insured you have better access to care for medical emergencies and chronic conditions.
It encourages a healthier lifestyle:
You may be more likely to take advantage of regular checkups and preventive care if you know it won’t cost you an arm and a leg.
3. Health insurance can help protect your business too
It shields your business from personal medical costs:
As a self-employed person or small business owner, unexpected personal medical expenses can cripple your ability to run your business. By limiting your personal liability for medical costs, health insurance can help keep your business afloat.
It helps you hire and retain the best workers:
Employer Sponsored group health insurance coverage is a valuable enticement in a total compensation package.
Comparing Individual & Family and Small Business Plans
There are two primary categories of health insurance for small business owners and self-employed persons to choose from:
1) Individual & Family or 2) Small Business/Group health insurance. Almost everyone can apply for Individual & Family insurance, and depending on the number of employees you have and the regulations in your state, you may qualify for Small Business/Group insurance. In some states, self-employed persons without any additional employees may only be eligible to apply for Individual & Family coverage.
Individual and Family Plans
These are health insurance plans purchased by individuals to cover themselves or their families. Almost anyone can purchase an individual or family health insurance plan, and it’s no longer possible to be declined based on your medical history. You generally need to enroll during the Obamacare annual open enrollment period, which typically runs from November 1 through January 31. Outside of open enrollment, you may only be able to enroll after you’ve experienced a qualifying life event such as marriage or divorce, the birth or adoption of a child, the loss of coverage, or moving to a new coverage area. Government subsidies may be available to help qualifying persons cover their monthly health insurance premiums.
Small Business/Group Plans
Sometimes referred to as “small business plans” or “group health insurance,” this is employer sponsored health coverage. Costs are typically shared between the employer and the employee, and coverage may also be extended to dependents. In certain states, self-employed persons without other employees may also qualify for small business/group plans. There may be special tax incentives available to some businesses providing group coverage to employees..
Top Four Health Plan Types
Whether you’re looking at individual and family or small business/group health insurance, there are several different types of health plans available. Some are designed to provide you with as many choices as possible when it comes to doctors and hospitals. Others are designed to keep costs in check by limiting you to a set group of “preferred” doctors and hospitals. Which type is best for you will depend on how much convenience and protection you want, and how much you are willing to spend.
Here’s a brief review of four popular types of health insurance plan:
HMO stands for “Health Maintenance Organization.” HMO plans offer a wide range of health care services through a network of providers that contract with the HMO, or who agree to provide services to members. Members of HMO plans will typically need to select a primary care physician (“PCP”) to provide most of their health care and refer them on to HMO specialists as needed. Health care services obtained outside of the HMO are typically not covered, except in an emergency.
An HMO plan may be right for you if:
• You’re willing to play by the rules and coordinate your care through a primary care physician
• You want to save every dollar possible; many HMO plans typically have lower monthly premiums than comparable
PPO stands for “Preferred Provider Organization.” Like the name implies, persons covered under a PPO plan generally need to get their medical care from doctors or hospitals on the insurance company’s list of preferred providers in order for claims to be paid at the highest level. It’s your responsibility to make sure that the health care providers you visit participate in the PPO. Services rendered by out-of-network providers may not be covered or may be paid at a lower level.
A PPO plan may be right for you if:
• Your favorite doctor already participates in the network; you can sort for plans accepted by your doctors after getting quotes with Ross Benefit Group
• You want some freedom to direct your own health care but don’t mind working within a list of preferred providers
EPO stands for “Exclusive Provider Organization.” EPO plans are similar to PPO plans but may be somewhat more restrictive when it comes to your network of doctors and hospitals. EPO plans typically do not provide you with coverage outside your network, except in emergencies. EPO plans are becoming more popular with health insurance shoppers, and health insurance companies are offering more of them as well. You’re generally not required to select a single primary care doctor with an EPO plan.
An EPO plan may be right for you if:
• You don’t mind getting your care through a specific network of doctors and medical providers
• You prefer not to coordinate your medical care through a primary care doctor
HSA plans are usually PPO plans with higher deductibles, designed especially for use with Health Savings Accounts (“HSAs”). Similar to a flexible spending account (FSA) or 401(k), an HSA is a special bank account that allows participants to save money –pre-tax– to be used specifically for medical expenses in the future. Unlike FSAs, the money in an HSA rolls over every year and can also earn interest. By pairing a qualifying high-deductible health plan with an HSA, participants can save money on health care and earn a tax write-o
An HSA-eligible plan may be right for you if:
• You would like to pay for health care expenses with pre-tax dollars (up to an annual limit)
• You’re relatively young and healthy and don’t often visit the doctor
• You prefer a cheaper monthly premium even if it means having a higher deductible in case of unexpected injury or illness
Five Health Insurance Terms You Must Know
When shopping for a new plan, one of the main challenges people face is understanding health insurance terminology. Here are five key health insurance terms you should understand:
Your premium is the amount you pay to the health insurance company each month to maintain your coverage. When trying to understand the cost of a health insurance plan, the premium is the first thing to consider. But make sure to balance it against other costs, such as copayments, deductibles and coinsurance.
A good rule:
Choose a lower premium/higher deductible plan if you are relatively healthy and want to save money upfront. Choose a higher monthly premium/lower deductible plan if you want lower costs when you actually get medical services.
Your copayment, or “copay,” is the specific dollar amount you may be required to pay up front for a specific type of medical service. For example, your health insurance plan may require a $25 copayment for an office visit or brand name prescription drug, after which the insurance company may pay the remainder of the charges.
A good rule:
If you make frequent doctor’s office visits, make sure you choose a plan with an affordable and consistent copayment.
Your annual deductible is the amount you may be required to pay out of pocket before the insurance company will begin paying for your covered medical claims. Keep in mind, your monthly premiums and copayments will often not count toward your deductible. Not all plans require a deductible, but choosing a plan with a higher deductible can keep your monthly premiums lower.
A good rule:
Keep your deductible to no more than 5% of your gross annual income if possible.
Pay attention to this amount when considering a new health plan. Your maximum out-of-pocket cost sets a limit to your annual financial liability. Once you have paid out of pocket (typically through deductibles, copayments or coinsurance) to the “maximum” amount, the insurance company pays the full charges for any additional covered medical services rendered that year. Your monthly premium will not count toward your maximum out-of-pocket costs.
Coinsurance is the amount that you may be obliged to pay for covered medical services after you’ve satisfied any copayment or deductible required by your health insurance plan. Think about it this way: the insurance company may limit coverage for certain services to, say, 80% of charges. So, for example, if your insurance benefits cover 80% of x-ray charges, you will need to pay the remaining 20%, even if your annual deductible is already met. That 20% is considered coinsurance.
What Health Reform Means For You
Understanding the Affordable Care Act
Not all self-employed persons and small businesses are affected by health reform in the same way. The law draws a sharp division between businesses with the equivalent (based on total hours worked) of 50 or more full-time employees and those with fewer than 50 employees. Businesses that employ the equivalent of 50 or more full-time workers will be required to provide group health insurance coverage to their employees or face financial penalties. Small businesses with fewer than the equivalent of 50 full-time workers are generally not required to provide group health insurance coverage, though tax incentives may be available to some who do. Individuals who do not receive group health insurance coverage through an employer-based plan are generally required to purchase coverage on their own or face possible tax penalties.
Group Health Insurance Services
***Provide health insurance benefits for employees, including medical, dental, vision, life, and short- and long-term disability insurance. Ross Benefit Group may also be able to help you save on your carrier, deductible, copay, prescription, and hospitalization. costs.***
Section 125 Plan
***Section 125 plans provide a simple and effective way to add employee benefits, especially for businesses with a number of employees who regularly have medical and childcare expenses. Employees can deduct their insurance premiums pretax and set aside pretax funds to use toward qualified medical and dependent care expenses. With a section 125 flexible spending account, employees can save an average of 30% in federal, state, and local taxes on items they already pay out-of-pocket.
For business owners, this means decreased company payroll and tax liabilities for social security, Medicare, and unemployment. A section 125 flexible spending account can save employers an average of almost $115 per participant in FICA payroll taxes – which can offset or be more than what you paid to start the plan.***
What is a Premium Only Plan?
***In combination with group health insurance, POP plans pay a portion of employees’ insurance premiums on a pre-tax basis, which reduces their taxable income and helps them save on FICA, federal, and (where applicable) state and local taxes. As a result, a POP reduces the income amount used to determine your payroll taxes as well.***
SELF-EMPLOYED PERSONS AND HEALTH INSURANCE
Self-employed persons are those in business for themselves, usually without employees. Many work out of their own homes. Some are consultants, graphic designers, Web engineers or bloggers.
Step 1: Assessing Your Needs
Understanding Your Needs
Selecting the best health insurance plan for your needs means making an informed choice and knowing your personal priorities. Is budget most important? Which benefits do you really need? Consider the following questions.
"Who will be covered under this plan?"
Why it matters: You probably want to cover yourself and your dependents. But ask yourself does anyone in your family have other coverage options? In some cases, you may actually be able to save money by covering different members of your family separately under two or more plans.
"Do you maintain a significant savings cushion or do you live paycheck to paycheck?"
Why it matters: If you don't maintain a cushion of funds in the bank, you may want a health plan with a lower deductible. If you do keep a savings cushion large enough to afford a higher deductible, you may be able to find a plan with lower monthly premiums.
"How often did you visit the doctor last year?"
Why it matters: If you visit regularly, it may make sense to pay a higher monthly premium in order to keep your office visit co-payment and deductible low. If you rarely visit the doctor, a plan with higher copayments may cost less per month.
"How much did you spend on health care last year?"
Why it matters: It's important to know what you spend on healthcare and if you expect to spend at the same pace. If these are recurring costs (for prescription drugs, for example) make sure that the plan you select covers these services at a level that’s affordable for you.
"Are you eligible for group health insurance coverage?"
Why it matters: In most states, self-employed persons buying health insurance plans on their own need to purchase individual and family plans. However, some states may allow persons with business licenses to purchase small business/group plans, even without employees. A small business/group plan may be a more affordable option than individual and family plans in some cases. To learn more about group health insurance, skip to the “Small Business Owner” section of this guide. Find out if you qualify for group health insurance by contacting your state department of insurance.
"Are any specific benefits necessary or irrelevant?"
If you’re a regular user of prescription medication, make sure you find a plan that covers prescriptions at a co-payment level you can afford. If it’s possible you or your spouse could become pregnant, pay close attention to how much you would need to spend form your own pocket for maternity care.
Step 2: Comparing Your Options
Getting Quotes and Researching Your Options
Before you can compare your Individual and Family health insurance options you’ll need to know what your choices really are. If you want to save money and make the most of your health insurance dollars, you’ll need the broadest possible view of the health plans available. By working with a licensed insurance broker like Ross Benefit Group you can save time and get a selection of quotes from top insurance companies in your area.
Five key criteria to help guide your decision:
You may find an almost overwhelming selection of health insurance companies and plans to choose from. Consider the following five criteria to help you determine which plans best match your personal needs.
Health Benefits: Which plans provide the must-have benefits you've identified at a level that’s affordable for you?
Costs: Which plans fall within your budget when it comes to premium, deductible, co-payments and coinsurance? Consider an HSA–eligible high deductible plan if your primary requirement is a low monthly premium and the opportunity to save money when paying for medical care.
Physician Network: Do you have favorite doctor you want to keep? Which plans does he or she accept? At eHealth.com, you can use our tools to see only those plans that are accepted by your doctor.
Prescription drug coverage: Not all drugs are covered by all plans, the coverage can vary from one plan to another. Let us at Ross Benefit Group show you which plan will save you most on your prescription drugs.
Brand: Are there brand-name insurers that you prefer? Are there any that you want to avoid? If you’re still not sure which plan is going to best meet your needs, please contact one of our local licensed agents for assistance. Our agents and representatives can be reached by phone, email or online chat.
Step 3: Applying for Coverage
The Enrollment Process
Once you’ve selected the health insurance plan you’d like, you’re ready to enroll. Enrolling in coverage is pretty easy, but here are some things you should know:
Open Enrollment Season
Under the Affordable Care Act, there’s an annual open enrollment period during which almost anyone can apply for coverage through an individual or family health insurance plan. The nationwide open enrollment period typically runs from November 1 through January 31. Coverage under a new plan selected during open enrollment generally begins no sooner than the first of the year. Outside of the open enrollment period, you may only be able to purchase Obamacare-compliant health insurance coverage when you experience a qualifying life event. Read on to learn more.
Special Enrollment Periods
Outside of open enrollment, you may trigger a personal special enrollment period of sixty days (typically) if you experience what the law considers a qualifying life event. These may include things like marriage or divorce, the birth or adoption of a child, the loss of employer based health insurance, a move to a new coverage area where your old plan no longer works, or a major change to your income.
Health Insurance Subsidies
Qualifying persons with a taxable household income of no more than 400% of the federal poverty level may qualify for government subsidies to make their monthly premiums more affordable. These subsidies, sometimes called advanced premium tax credits, are not available for small business health insurance, only individual and family coverage.
Where to Enroll
You can enroll in a new individual and family health insurance plan through various places including private online marketplaces like eHealth.com, government-run exchanges, or directly through the health insurance company. Working with Ross Benefit Group may provide you with a broader view of your options and make it easy to get personal advice and help from licensed agents.
What to Expect
You may receive confirmation of your approval for coverage right away, or within a few days. In some cases, it may take longer. Remember that your coverage typically will not begin right after approval. If you enroll by the 15th day of the month, your coverage will generally begin on the first day of the next month. If you enroll after the 15th, your coverage typically won’t begin until the first day of the month after next.
Step 4: After You Buy
After Purchasing a Plan
Once you’re approved for coverage you will receive official correspondence from the insurance company confirming the date on which your coverage will begin. After that date, you are welcome to begin enjoying your benefits. Look over any documents sent to you by the insurance company and contact their customer service department or your agent with any questions.
Questions about Your Claims
If you have questions or concerns about how a medical claim was processed, your first step is to contact the health insurance company’s customer service department. If they are unable to assist you or you feel that they’re not addressing your concerns, contact your health insurance agent for help (if you worked with one). Because of his or her relationship with the health insurance company, your agent can help you understand how your benefits work and may be able to suggest ways to clear up billing disputes.
Adding and Removing Dependents
Family changes such as marriage, the birth or adoption of a child, or an older child’s 26th birthday may mean that you need to make changes to the list of persons covered by your health insurance plan. Contact your health insurance company for instructions on how to do so.
Changes to Monthly Premiums and Benefits
Depending on how long you keep your new coverage, you may find that the insurance company occasionally changes the monthly premium you pay for your coverage. They may also make changes to how benefits are covered or paid. Be sure to read through the updates provided by your insurance company and contact their customer service department or your agent for more information.
SMALL BUSINESS AND HEALTH INSURANCE
If you’re a small business owner with at least one full-time employee other than yourself, this portion of our guide is designed to help you understand your health insurance choices and find the right match for your personal needs and budget. While many of your choices will be the same as those faced by self-employed persons, small business owners often have special concerns and special opportunities.
Step 1: Assessing Your Needs
Selecting the best health insurance plan for yourself and your business means making an informed choice and knowing your own priorities, and those of your employees. Is cost your number one concern? What kind of coverage is most valuable to you and your employees? Consider the following questions and discuss some of them with your employees to help you gauge your overall needs.
Four questions to help you assess your needs:
"Who will be covered under this plan?"
"How much cost-sharing can you afford?"
"Would employees rather pay more up front and less when sick, or vice versa?"
"What kinds of benefits are most important to you and your employees?"
Five key criteria to help guide your decision
When considering your options, use the following five criteria to help you determine which plans best match your needs:
Monthly premium: Know what you and your employees will be required to pay on a monthly basis to maintain your coverage. You’ll also want to know what you and your employees may be required to pay toward the monthly premiums of dependent spouses or children.
Deductibles, copayments and coinsurance. These forms of cost-sharing only come into play when you receive medical care. Make sure they’re affordable for you and your employees, both for regular medical care as well as care for more serious or unexpected medical conditions.
Medical provider networks: if you have a preferred doctor or hospital, make sure they're in-network for any plan you’re considering. Otherwise you’re claims may be denied or paid at a lower level.
Prescription drug coverage: Some plans cover different prescription drugs than others, or pay more toward them. eHealth has a prescription drug coverage comparison tool that can show you what you’re estimated to pay based on your personal Rx needs.
Coverage add-ons: Health insurance plans typically don't cover dental or vision care. At Ross Benefit Group you can add these and others to your purchase to build a complete benefits package for yourself and your employees.
When shopping for a group health insurance plan, we highly recommends that you speak with a licensed agent for personal assistance. Ross Benefit Group's own licensed agents and representatives can be reached by phone, email or online chat.
Step 3: Applying for Coverage
The Application Process
Completing Your Application
Once you’ve selected a health insurance plan that you’d like to apply for, your agent can help you through the application process. Be sure to answer all questions honestly to the best of your knowledge. You may find that you’ll need to confirm the zip codes and dates of birth of your employees.
Don’t Worry – You Won’t Be Declined For Medical History
Although the overall health of the persons to be covered under your plan may have some effect on your monthly premiums, no individual in the group will be declined coverage based on his or her medical history. If you legally qualify as a business in your state, you are automatically eligible for the plan you selected. Even if they have a pre-existing medical condition, eligible employees will not declined for coverage.
Enrollment is the process of getting your employees and their dependents signed up for your new health plan. Your health insurance agent or broker can help you make sure that all the proper materials are collected and provided to the health insurance company so everyone gets enrolled. When you work with eHealth as your agent, a representative can help walk you through the process.
Step 4: After You Buy
After Purchasing a Plan
Once you’re approved for coverage you will receive official correspondence from the insurance company confirming the date on which your coverage will begin. After that date, and once enrollment is complete, you are welcome to begin enjoying your benefits. Look over any documents sent to you by the insurance company and contact their customer service department or your agent with any questions.
Questions about Claims
If you or your employees have questions or concerns about how a medical claim was processed, your first step is to contact the health insurance company’s customer service department.
If they are unable to assist you or you feel that they’re not addressing your concerns, you may contact your health insurance agent for help. Because of his or her relationship with the health insurance company, your agent can help you understand how your benefits work and suggest ways to clear up billing disputes.
Adding and Removing Covered Persons
Employees may come and go, and they may need to add or remove dependents from time to time. As such, you will periodically need to make changes to the list of persons covered by your group health insurance policy. Your health insurance agent is available to help you with all these changes in a timely and effective manner.
Changes to Monthly Premiums and Benefits
Depending on how long you keep your new coverage, you may find that the insurance company occasionally changes the monthly premium you pay for your coverage. This typically happens once a year during the “open enrollment” period. They may also change your coverage levels, deductibles, or copayments. Be sure to read through the updates provided by your insurance company and contact their customer service department or your agent for more information.
Supplemental Health Care Options
A diverse and multi-generational workforce has a range of health care needs that can’t be met by a one-size-fits all medical plan. Supplemental health care options can cover those needs.
- Hospital Indemnity complements medical coverage and reduces employees’ out-of-pocket expenses for hospital stays.
- Accident Insurance closes covers out-of-pocket expenses and non-covered medical services required after an accident.
- Critical Illness/Cancer bridges the gap between traditional medical coverage and disability, providing protection against potential financial consequences.
- Dental Care is an affordable and very popular way to help employees control or reduce dental care expenses.
- Vision Care reduces your employees’ share of the cost of the services and products provided by eye care professionals.
- Telehealth gives your employees no-cost care when they need it – on-demand, 24/7 access to certified medical professionals and assistance with non-emergency issues not requiring an office visit.
- Long-Term Care covers care in the case of long-term illness or the effects of injury not covered by medical and disability coverage.
- Worksite Wellness offers discounts on many health-related and life-style products and services.
Financial Wellness Options
Studies show that financial pressures can compromise employee performance. A voluntary benefits program with financial wellness options relieves the pressure and restores productivity.
- Life Insurance with Long Term Care provides financial protection for employees’ families following an insured person’s death with the added benefit of truly affordable long term care insurance for conditions not covered by medical or disability insurance.
- Identity Theft protection is the fastest-growing voluntary benefits product on the market. Protect your employees with ID theft reimbursement insurance and access to fraud resolution experts.
- Short and Long-Term Disability Income replaces a portion of employees’ income during periods when they are unable to work.
- Pre-paid Legal provides discounted legal services including consultations on legal matters and preparation of wills and trusts.
- Accounting Services provides employees with assistance in tax preparation and related financial analyses.
- Personal Financial Planning gives employees access professional education, retirement and estate planning services.
Lifestyle and Personal Options
When you offer voluntary benefits solutions that provide discounts on the lifestyle and personal products, you can boost employee satisfaction and improve your ability to attract and retain talent.
- Group Auto and Homeowners Insurance offers discounted rates on personal property and casualty insurance products.
- Pet Insurance is growing in popularity. Help your employees cover the cost of veterinary care in the event of pet accidents and illness.
- Travel Insurance covers employees who travel frequently, often at discounted rates.
- International Medical covers employees who travel abroad.
- Discount Programs offer savings for employees on a wide variety of popular goods and services such as electronics, cellular services, travel, fitness and more.