Health Insurance Articles
The Challenges Of Small Business Health Insurance
2010-11-02
Small business health insurance is a competitive edge to have in today's market. However, there are challenges that come along with obtaining small business health insurance that can vary in cause. The most common challenge is the cost of medical insurance premiums, which is usually the dividing point in what type of small business health insurance that is finally obtained. While there are difficulties in obtaining small business health insurance, there are also incentives to overcome these challenges.
Medical insurance premiums are significantly higher, generally speaking, with small business health insurance than with the company-funded insurance of larger organizations. The reason is that small business usually deals with companies of less than 50 employees. Larger companies can get rates quoted for a significantly larger number of people, which usually offers a greater opportunity for lowered medical insurance premiums because the risk is spread out among a larger group of people. This risk factor can be eliminated somewhat if the small business health insurance is self-funded or if the covered employees are in overall good health. Generally speaking, however, larger companies usually trump smaller companies in costs of medical insurance premiums because of their ability to bid for coverage with a greater number of people.
Small business health insurance usually requires a bit of negotiation in order to reach a point where all of the parties are satisfied. Medical insurance premiums can be made more affordable to both employer and employee through different methods. A favorite method is the use of health savings accounts. A health savings account is a type of employee self-funding for some medical expenses, easing the financial obligation of the employer, whose funds can then be redirected towards medical insurance premiums that protect the employee in case of major medical needs. Another of the popular methods of controlling costs of medical insurance premiums is lowering the actual medical coverage to keep rates more affordable. This is not a favored move, but is often the path taken to minimized expenses, as opposed to dropping coverage altogether.
No matter the type of small business health insurance that is obtained, it is almost certain to be of great benefit to both employer and employee. For employees, medical insurance premiums would be significantly higher at individual rates than at the rates of small business health insurance purchased in group style. Companies that have small business health insurance available are more attractive to prospective employees than those that do not offer this type of group insurance. Both parties are benefited in different ways, but the most important factor for all is that small business health insurance reduces sick days and time off and increases worker productivity.
