Resources for Health Insurance

Any way you slice it, health insurance coverage is expensive. Major corporations can negotiate better rates because of the large numbers of employees, but small businesses with two to 50 employees don't have the clout to negotiate big volume discounts.

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)

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.

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.

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.

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.

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.

• 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.