Sept. 19, 2023

This paid piece is sponsored by Sanford Health.

Why should you have and offer health insurance as a small-business owner?

• Health insurance protects your finances.
• Health insurance protects your health.
• Health insurance can help protect your business too.

Essentially, health insurance helps small-business owners in the following ways:

1. Health insurance protects your finances

Discounted rate: Small-group insurance plans provide you with discounted rates for medical care. Insurance companies negotiate rates with health care providers. Without coverage, the fee charged for a regular office visit and other medical services can be much higher.

Protection against the unexpected: Health insurance can protect you from unexpected medical costs. Even if your health plan requires you to pay certain costs out of pocket, being covered can protect you from bankruptcy in case of injury or hospitalization.

2. Health insurance protects your health

As a health plan member, your insurance gives you access to quality care through a network of health care providers.

Access to critical care: When you’re insured, you have better access to care for medical emergencies and chronic conditions.

Access to preventive care: When you’re insured, you may be more likely to take advantage of regular checkups and preventive care often offered at no cost to the member.

3. Health insurance can help protect your business too

Protection against the unexpected: As a small-business owner, unexpected personal medical expenses can take away from your ability to run your business. By limiting your personal liability for medical costs, health insurance can help keep your business operating.

Hiring and retention: Health insurance can help you hire and retain the best workers. Employer-sponsored group health insurance coverage is a valuable enticement in a total compensation package.

Key concepts

There are two primary categories of health insurance for small-business owners to choose from: individual or employer-sponsored 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 to offer employer-sponsored coverage.

Individual plans

These are health insurance plans purchased by individuals to cover themselves and their families. Almost anyone can purchase an individual health insurance plan, and it’s no longer possible to be denied for coverage based on your medical history. You generally need to enroll during the annual open enrollment period, which runs from Nov. 1 through Dec. 15 for a Jan. 1 effective date. Outside of open enrollment, you may be able to sign up only 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. Federal assistance may be available to help qualifying individuals with monthly premium assistance and cost-sharing benefits.

Group health insurance plans for small employers

Sometimes referred to as small-business plans or group health insurance, this is employer-sponsored health coverage. Costs typically are shared between the employer and the employee, and coverage may be extended to a spouse and dependents. These plans also require insurance carriers to no longer ask health questions to quote the group or deny coverage based on medical history.

Health plan types to know

Whether you’re looking at individual or group health insurance, there are several 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 network of 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 plans.

PPO

PPO stands for preferred provider organization. Like the name implies, people 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 want some freedom to direct your own health care but don’t mind working within a list of preferred providers.

HMO

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 that agree to provide services to members. Members of HMO plans typically will need to select a primary care physician to provide most of their health care and refer them to HMO specialists as needed. Health care services obtained outside of the HMO typically are 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 plans.

EPO

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-eligible plans

These plans are designed especially for use with health savings accounts. Similar to a flexible spending account or 401(k), an HSA is a special bank account that allows participants to save money on a pre-tax or tax-deductible basis to be used specifically for medical expenses in the future. Unlike FSAs, the money in an HSA rolls over every year and also can earn interest. By pairing an eligible plan with an HSA account, participants can save money on health care and earn a tax write-off.

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 visit the doctor often.
• You prefer a cheaper monthly premium even if it means having more cost-sharing with an unexpected injury or illness.

Download the health insurance for small business guide

View guide

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