Health Benefit Options for Small business owners:
This article is written for my home state of Texas so options may vary slightly in other states. Most of these plans will also work for individuals as well as small business owners with a couple of exceptions.
- Work Sponsored Health Plan: Many business owners have a spouse that works and is offered a health plan through their employer. In this case, this should always be a consideration, at least for the member of the family that is offered the work plan.
Pros: Great option for employees since the company typically pays most of the premium. Usually, a PPO option is available too. Since it’s a group plan, the group has access to more types of plans than an individual does.
Cons: Many employers do not help pay for premiums when adding family members to the employer plan so this option can get pricey to add the family too. In this case, shopping for alternatives is recommended.
- Individual ACA Plans: ACA stands for Affordable Care Act which I know is a dirty word in a group like ours. There’s no question that health plan prices skyrocketed after this law was passed in 2014. But, even so, this type of plan is typically a good fit for families who qualify for a substantial tax credit and/or have preexisting conditions that might make it difficult to qualify for other options.
Pros: If you are a Patriot Owned Business owner who is just starting out, this may be a good place to look for coverage until the business takes off and income is more stable. Case in point, a family of 4 in Collin County with parents in their early 40s and 2 kids under 18 that makes $100k adjusted gross income can qualify for a plan starting at $178.65 a month. The cost would be even lower if income is lower. Also, by law, ACA plans cannot exclude covering preexisting conditions so this may also be a good option for those with these conditions or expensive medications to cover.
Cons: Going this route can be pricey for families that do not qualify for subsidies. The same family example from above with a much higher income would have to pay $1032 a month for this same plan. In this scenario, the family would likely be best off looking at other options before committing to such a high premium. The other issue is in Texas only HMO or EPO plans are available on the individual ACA market. These plans have narrow networks so checking the network coverage is essential to finding the right plan.
- Indemnity PPO plans: These plans are typically lower cost because they are underwritten meaning you must be overall healthy to qualify. They are also limited in what they will cover. For instance, most of these plans have a 1-year limitation on covering preexisting conditions. They typically also have other limits such as how much will be covered each year per person and the number of doctor visits allowed per person so these factors must be considered and understood before signing up. For healthy families who do not qualify for a subsidy, this may be a good option. The family of 4 from the ACA example could get a plan like this with a million dollars per person in coverage for about $600-$700 a month instead of paying over $1000 for a high deductible ACA HMO.
Pros: Lower cost and wider network since most of these plans are PPO and are accepted by most providers. Many of these plans have low or no deductibles unlike the ACA plans that have high deductibles unless you pay even more for a low deductible plan.
Cons: Not a good fit for anyone with serious chronic health conditions or who may qualify for a lower cost ACA plan. It’s important to understand the limitations of the plan and get a plan that has adequate coverage.
- Small Group Health Plan: If you have at least one employee for your business, you may want to consider getting a small group health plan instead of an individual health plan.
Pros: Offering group coverage can help you compete with bigger businesses in attracting employees by offering benefits such as what an employee can get working for a bigger company. Offering a group plan also opens a lot of possibilities. For one, there are many more carriers available to groups than individuals. You can get a PPO plan and gain access to many low-cost carriers that only do group coverage.
Cons: This can be expensive but with many options to choose from, it’s important to consider all alternatives before writing it off as unaffordable.
- Health Sharing Plans: In Christian and patriotic communities such as ours, Health Sharing plans can be popular. The first thing to note is that Health sharing plans are not insurance. It is a group of like-minded individuals that gather based on common interests/goals and share health related costs. This sharing is typically facilitated by a company that manages the transactions and charges monthly membership fees to cover the costs. These plans can be purchased at the individual level, and many do offer small group sharing plans as well.
Pros: Like Indemnity plans, these types of plans tend to be lower cost for families that do not qualify for an ACA subsidy. They also typically do not have a network so a member can choose providers as they see fit.
Cons: This is not actually insurance so there are no guarantees expenses will be covered. These plans also tend to only cover big expenses and not small things such as an occasional doctor’s visit and a yearly physical etc. They also often have pre-existing condition clauses, so these plans are best for people who are overall healthy to begin with.
- Other ways to save: There are many ways to save money while ensuring adequate coverage. One thing to consider is purchasing a high deductible plan to protect against catastrophic health issues and bundling it with low-cost ancillary plans such as accident and critical illness plan to cover costs before your deductible is met. There are even several telehealth only plans that will cover doctor and mental health visits that can make overall premiums and costs more affordable while still meeting your day-to-day needs.
Although the choices available can be overwhelming, the most important takeaway should be that health insurance is not one size fits all. There are pros and cons to every option and what may be a good fit for one family or business owner may not work for another. Finding a knowledgeable agent that has your best interest in mind can help you navigate what solutions would be a good choice for your situation.
About the Author: Theresa Struckmeyer has been a health insurance broker since 2013 and offers health, dental, life, Medicare, and ancillary plans in Texas, California, and Florida. She has lived in McKinney Texas since 2020 with her husband and 2 kids. Besides helping families navigate health options, she enjoys spending time with her family, cooking, and exploring new places. She can be reached at [email protected] or 714-244-8761.
