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Choose among the best health insurance options for you and your employees

Different companies look for different things when they try to choose a health insurance company. Some focus on quality while others focus on cost.

I recommend: If you are concerned about the cost of small business health insurance plans, look to eHealthInsurance for health insurance quotes. This helps you to compare rates and get the best deal. If you want to offer the highest quality plan to employees, check out the rankings by US News and World Reports.

Make sure that employees understand their COBRA health insurance options

The Consolidated Omnibus Budget Reconciliation Act (COBRA) helps employees who lose their health insurance benefits. It allows them to continue their coverage over a specified time period, assuming that they cover the payments.

I recommend: The U.S. Department of Labor is the premier source of information about COBRA benefits. COBRAInsurance.com also offers information on COBRA and can help employees with insurance quotes. Sometimes, a COBRA plan is more expensive than a new health insurance plan.

Use an HSA to help cover the costs that health insurance does not cover

All health insurance companies require patients to pay a certain percentage of their health care costs. Some insurance companies do not cover certain procedures. A health savings account (HSA) allows your employees to use pre-tax dollars to pay for these expenses, saving them money.

I recommend: Understand how HSAs work by visiting the website of the U.S. Department of the Treasury. Then, have employees sign up for accounts through HSA Bank, or another bank that offers health savings accounts.

Helpful advice for making the most of this Guide

• •  Providing employees with excellent health insurance options keeps them excited about your company. Periodically ask for employee feedback about their health insurance to make sure that you are giving them what they need.

With costs skyrocketing, many small business owners are finding it more and more difficult to offer health insurance to employees. In turn, this makes it difficult to attract and retain quality people. There are three popular types of health insurance plans available:

1. Health maintenance organizations (HMOs)
2. Preferred provider organizations (PPOs)
3. Point of service plans (POSs)

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Know your HMOs, PPOs and POSs

The least expensive and least flexible plans are HMOs, which require employees to choose a primary care physician from an approved provider list. Premiums are higher with PPOs, which allow employees to visit any doctor, but charge more if the doctor isn't in their network. POS plans combine elements of HMOs and PPOs, with employees choosing a primary care physician but retaining the ability to see any doctor for a higher fee.

I recommend: Get a clearer picture of the various types of plans in the Health Insurance Buyers Guide at BuyerZone.com or at HealthInsurance.com.

Explore health savings accounts (HSA)

You may be able to control health insurance costs with an HSA. With HSAs, employers and employees make pre-tax contributions to an account. Funds in the account can be used for routine and preventative medical care. HSAs are usually combined with a high-deductible insurance plan. Any funds in HSAs that aren't used by the end of the year typically roll over to the following year.

I recommend: Get more details on how you can reduce costs with an HSA at First Horizon Msaver and download "Answering Your Questions About Health Savings Accounts" at the Council for Affordable Health Insurance.

Consider using a health insurance broker

In some states, you can purchase insurance directly from a provider; in others, you're required by state law to use a broker. Even if you aren't required to do so, it may be beneficial to use a broker. Brokers are very familiar with the various plans available and can quickly determine which plans fit your needs and your budget. And since they also handle dental and vision insurance, you can take care of all your health insurance needs with one person.

I recommend: Look for a broker who has experience helping small businesses in your industry at the National Association of Health Underwriters.

Offer dental and vision insurance

Many businesses realize that one way to attract and retain good employees is to add dental and/or vision insurance to the list of benefits. The options for dental insurance can be just as confusing as those for health insurance, but vision plans are typically more basic. A broker can help you find the right plan for your business.

I recommend: Get the basics on dental and vision plans in the Dental and Vision Insurance Buyer's Guide at BuyerZone.com, where you can also find free quotes.

Decide who pays

There are a number of ways to cover the costs of health insurance premiums and each will impact your budget and your ability to attract employees. For instance, if you pay the entire cost of the premium, your budget may take a hit, but it may make your company more desirable to high-quality employee. Other options include paying the employee's premium but asking them to pay premiums for additional family members or asking workers to pay a percentage of their premium.

I recommend: Get small business group rate quotes and compare plans online at eHealthInsurance.com. Discover some of the many options for cost containment at HealthInsurance.com, which also offers a cost calculator to help you determine the smartest contribution formula for your business.

Helpful advice for making the most of this Guide

• •  Check with superstores, such as Costco, in your area. Some have begun offering small business group health insurance.
• •  Having healthier employees can help lower costs. Encourage health and wellness among your employees.
• •  Be cautious when buying health insurance. If a price seems too low, you might want to check with your local states' insurance commission to make sure that company or broker has not had any complaints.
• •  Be prepared for an annual rate hike. Most insurers are increasing their rates each year, so build the increase into your budget.
• •  Sometimes you can find a good deal on health insurance for your small business by joining the local chamber of commerce. Most chambers are now offering group health insurance policies for their members.

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Purchase group health insurance from the major carriers

You should always check that a company offers coverage in your area before you purchase insurance through them. Some insurance companies are industry leaders and offer programs in a variety of states.

I recommend: Blue Cross and Blue Shield is one of the most popular choices for health insurance because they offer a service in many areas. Kaiser Permanente, Aetna, and Cigna are also great insurance companies.

Save money by purchasing health insurance through a professional employers organization

Small businesses face the challenge of finding quality health insurance plans at a price they can afford. With just a few employees, they may not be able to get the same discounts that large companies receive. Nonetheless, most small businesses want to offer coverage to employees.

I recommend: Professional Employers Organizations (PEOs) may be the answer. Due to a larger number of members, the organization is often able to negotiate a discount on health insurance. Employers Choice Plus offers access to many different insurance companies. You may also want to search StaffMarket for a PEO in your area.

Include dental health coverage to round out your plan

Not all health insurance plans include dental coverage. You may have to purchase a ride on plan or choose a completely different company for dental coverage. Check with your chosen provider to see if they offer dental benefits.

I recommend: Delta Dental and Humana Dental are popular insurance programs that only cover dental benefits.

Helpful advice for making the most of this Guide

• •  If you are self employed, health insurance can be quite costly. Try joining a professional organization to receive discounts on group plans.

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Co-payment

Patients are required to make a co-payment under most health insurance plans. A co-payment is a set fee, such as $5 or $10, for a doctor or a hospital visit at the time of service. The health insurance provider covers the remainder of the medical bill. Co-payments apply mostly to routine services.

I recommend: The Insurance Information Institute provides further resources on health insurance and co-payments. The Blue Cross and Blue Shield Association provides an overview of how co-payments are applied.

In-network versus out-of-network

A doctor or a hospital that is 'in-network' holds a contract with certain health insurance providers. Therefore, certain fees are negotiated between the physician and the insurer for medical services, which can sometimes be a cost savings benefit for you and your employees. 'Out-of-network' means a doctor or hospital does not work with certain health insurers. When using out-of-network providers, coverage may be denied and you're held responsible for the bill.

I recommend: Details about in-network and out-of-network coverage are available at HealthCare.com and HealthInsuranceControl.

Deductible

Deductibles are the up-front fees you must pay before health insurances picks up the tab for the rest. Costs range from hundreds to thousands of dollars, depending on the insurer. Deductibles usually apply to insured members who have surgery or other extended medical treatment.

I recommend: GoHealthInsurance sorts out the basics of health insurance premiums and deductibles.

HMO versus PPO

An HMO, or a health-maintenance organization, is a managed-care plan that requires members to get referrals from their primary-care physician before seeking treatment, or else coverage may be denied. A PPO, or Preferred Provider Organization, is another type of managed-care plan that gives you more choices when choosing physicians. In a PPO, members also have more freedom to go to a specialist without a referral from a primary-care doctor.

I recommend: The California Office of the Patient Advocate gives more information on how an HMO works. CIGNA is an example of a health-insurance provider that presents features and benefits of PPOs and how they work.

Open enrollment

Open enrollment, which is held annually, is the time period that gives employees the opportunity to apply for certain health insurance programs. Applicants are not required to present proof of insurability during this time period and can avoid the coverage delays or higher premiums sometimes associated with pre-existing medical conditions. Open enrollment lasts for up to 30 days.

I recommend: Planforyourhealth offers tips on open enrollment.

Drug formulary

Health insurance companies follow a drug formulary, which is an approved list of prescription medications that they cover.

I recommend: Group Health Cooperative has a search option for brand name and generic prescription drugs.