If you run a small business, you may be concerned about finding health insurance options either for yourself (if you do not have any employees) or for your small workforce. Fortunately, there are several different options available. In this article, we will explore health insurance for those who are self-employed on their own, and for those who are seeking small business health insurance plans for a workforce of two to 50 employees.
If you are self-employed without any employees, you’re probably busy enough as it is without worrying about your health insurance options. The good news is that the Affordable Care Act now allows a self-employed health insurance deduction for 100% of their health insurance premium. You can search the Health Insurance Marketplace for plans that will fit your healthcare needs and budget. If you’ve missed the ACA open enrollment period to apply for health insurance, you can also consider a short-term health insurance plan to cover your health expenses until the open enrollment opens again. You can also check and see if you qualify for Medicaid healthcare coverage, or even elect to self-fund your health insurance. Many insurers now offer self-insured employee healthcare. Because you are only insuring yourself, you have some flexibility in choosing the best plan for your needs.
If you have at least two employees but less than 50, then things get a bit more complicated. You should start looking into small business health insurance plans to figure out how to best cover your employees. Read on for our picks of the best health insurance providers for small business owners.
Best for Online Care: UnitedHealthCare
UnitedHealthCare if a part of UnitedHealth Group and is the largest single health insurer in the United States and is rated “A- (Excellent)" by A.M. Best. UnitedHealthCare offers health insurance plans to small business owners with two to 50 employees. One great feature that both employers and employees will love is the “virtual visits” option, which allows access to online care 24/7. You can talk to a doctor from your mobile device or computer without an appointment and can even get a prescription to pick up at your local pharmacies. There is also a health discount program that allows you to save up to 50% on select health and wellness services like cosmetic dental care, laser eye surgery, acupuncture, massage therapy, infertility, hearing devices and more. Some of the most popular UnitedHealthCare small business health insurance plans are UnitedHealthcare Choice, UnitedHealthcare Choice Plus, and UnitedHealthcare Options PPO.
The UnitedHealthcare Choice is an open-access medical plan, meaning you can see any doctor or healthcare facility of your choosing. This health plan is open to employers from 2 employees to over 5,000 employees. Features of the plan include fixed dollar copayments, coinsurance options and lower out-of-pocket costs for care from in-network doctors and clinics.
UnitedHealthcare Choice Plus offers the same benefits as UnitedHealthcare Choice but with added coverage for out-of-network doctors. For the added coverage, there is a higher coinsurance payment along with a higher deductible.
Finally, the UnitedHealthcare Options PPO plan offers substantial discounts to employees who use in-network care. However, you can use any doctor of your choice without a referral. Members must obtain approvals for both in- and out-of-network services. When using an out-of-network doctor, copayments and deductibles may be higher.
You can receive UnitedHealthcare small business healthcare plan specifics for your state here.
Best for Tax Savings: Humana
Humana offers small business health insurance to employers with two to 99 employees. Plans and options vary by state, so be sure to check restrictions for your area.
The Humana Simplicity plan provides in-network preventive care and allows employees to pay a set copay amount for services. After the out-of-pocket expense is met, the plan pays 100% for covered services. The plan also includes wellness incentives.
The Level Funded Premium plan is for employers with 10 or more employees. This is a flexible self-funding plan with comprehensive medical and pharmacy plans and includes wellness programs. Premium tax savings are possible through this plan along with a refund for any claims surplus.
The Self-Funded Plans allow employers to have predictable costs and administrative help for their plans. You can cover your premium with one monthly payment. The self-funded plans typically offer lower premium payments for employees.
The High Deductible Health Plans through Humana allow employers to offer low premiums to employees by having a higher deductible which covers both medical and prescription drug costs. Annual in-network exams are covered 100% and the plans can also be paired with health savings accounts.
Humana Copay Plans allow employees to pay a flat fee for services and offer lower costs for care provided by in-network healthcare doctors and facilities. Coverage is provided through this plan for annual in-network exams which are paid 100%.
The Coinsurance Plans offer 100% coverage for preventive exams and services and discounted rates for other services through in-network providers. The prices for services are negotiated through Humana and employees pay a percentage of the negotiated price.
Best for a Large Provider Network: Blue Cross Blue Shield
The Blue Cross Association not only operates in the United States but also in more than 170 countries worldwide. In all, more than 99 million Americans are covered by a Blue Cross policy. There are 36 separate Blue Cross organizations throughout the U.S.
Blue Cross Blue Shield offers small business health insurance plans for employers with 50 employees or less. Blue Cross Blue Shield has one of the largest preferred healthcare provider networks in the nation, making it easier for employees to see an in-network doctor or healthcare facility and receive the preferred provider discount. Blue Cross Blue Shield also offers many wellness incentives including Blue365 which offers discounts on health and wellness products and services.
Most states offer some form of Blue Cross small business health insurance plan for employers with two to 50 employees. Pharmacy networks are included in the plan options. There are over 30 plan options with different deductibles, out-of-pocket expense, coinsurance, copayment and preferred provider options. Here is a sample plan brochure for the state of Texas. Coverage options and plans will vary based on state.
The plan features virtual visits, a preferred pharmacy network, and prescription programs on payment level tiers. Prescription drugs on the lower level tiers will cost less so there will be less out-of-pocket pharmacy expenses for the employee.
Best for Health Savings Plans: Aetna
Aetna is one of the largest health insurers in the nation and has an “A (Excellent)" financial strength rating with A.M. Best. Aetna offers a small group of health plans for employers with two to 50 employees. Coverage options and plans will vary based on state.
Open Choice Plan: The open choice plan allows you to visit any healthcare provider you choose, although the rates may be lower if you choose a network doctor. You can also visit a network doctor without a referral. Any licensed doctor or specialist is allowed in the open choice plan through Aetna. Out-of-pocket expenses may be higher if you do decide to visit an out-of-network provider.
Traditional Choice Health Insurance Plan: The traditional plan allows you to visit any licensed doctor or specialist without a referral, although you may need to get approval for certain kinds of services. Those services are outlined in the Benefits Summary of your policy. With the traditional plan from Aetna, you pay for your care when you visit the doctor, submit a claim and then receive the money back.
Aetna HealthFund One-to-One Employer Overview: This plan works with any of the Aetna small business healthcare plan options. Once you choose a plan, you pair it with either a health fund or health savings account to lower the total deductible costs, lower premiums, and receive online tools and free preventative care services. The HRA and HSA plans are tax deductible for employers and tax-free for employees.
Best for Managed Care: Kaiser Permanente
Kaiser Permanente is a managed care organization where customers can receive medical care from Kaiser Foundation hospitals and medical centers. Kaiser Permanente has excellent financial strength ratings and has won numerous customer service awards through J.D. Power & Associates. It offers small business health insurance plans to business owners in the states of California, Colorado, Georgia, Hawaii, Maryland, Virginia, Washington, D.C., Oregon and Washington. The plan options will vary based on your state. Kaiser Permanente offers four main health insurance policy options for small business owners including Traditional HMO Plans, Deductible HMO Plans, HRS and HSA-Qualified Plans and Deductible HMO with HRA Plans.
The Deductible HMO Plans offer employees the option to have a higher deductible but also a lower premium. These plans can also be paired with a health savings account (HSA) or health reimbursement arrangement (HRA) for additional tax savings. This plan is designed to offer employees a lower premium while still maintaining quality healthcare options.
Consumer-directed health plans from Kaiser Permanente are the HRA and HSA-Qualified Plans, which offer employees tax-free funds to help pay for healthcare expenses. Employees enrolled in these plans have access to the same services provided to members of traditional HMO plans.
The PPO plans allow employees who may live outside of the preferred provider area to use any licensed doctor of their choice without a referral. The plans are administrated by a single carrier to avoid paperwork delays in paying claims. Discounts are provided when in-network doctors and healthcare facilities are accessed by members.
The Point-of-Service Plans take the best features of the POS, HMO, and PPO plans and combine them into one policy. The employee can then chose quality healthcare from any Kaiser Permanente provider facility, PHCS network physician, or any other licensed provider. This plan provides lower premiums but also gives the ability to go out of network to find a doctor when the need arises.
You can review the specific Kaiser Permanente health plan options for your state here.
What Is Small Business Health Insurance?
Small business health insurance is health coverage for those that are self-employed and small business owners. It can also be for small business employees where the employer offers health insurance options. Small business health insurance is typically for businesses with 2–50 employees.
A business typically purchases coverage through the Small Business Health Options (SHOP) marketplace or an insurance broker. They may choose a small group option, which is then offered to the employees at a group discount that is usually cheaper than buying insurance on your own.
How Much Does Small Business Health Insurance Cost?
Small business health insurance costs vary depending on a number of factors. Some states have higher insurance rates than others. The cost also depends on the number of employees, the type of insurance offered, whether there is a copay and how much the deductible is. There are many different types of variables and coverage available so it’s best to check with the provider to find out the details and the cost.
Is Small Business Health Insurance Worth the Cost?
Small business health insurance is typically worth the cost from both the employer’s and the employee’s viewpoints. As an employer who offers health insurance, you’re offering a perk to your employees that makes them more likely to stay. It can also lead to a healthier workforce.
From an employee's standpoint, it’s generally cheaper to pay for small business health insurance than purchasing it on your own. You can take advantage of the small-group pricing and save the legwork of having to call around and price shop.
If you choose not to purchase small-business health insurance, you can see if you qualify for free health insurance such as Medicaid, you can purchase an individual policy, or you can go without any insurance and pay everything out of pocket, which can get quite costly.
How We Chose the Best Small Business Health Insurance Providers
We reviewed and researched many of the most popular small business health insurance providers that offer insurance today. We narrowed down our top five based on each company’s reputation and rating, type of services covered, additional features offered, online service options, and more.
Internal Revenue Service. Publication 535: Business Expenses. Worksheet 6-A: Self-Employed Health Insurance Deduction Worksheet. 2019
A.M. Best. AM Best Revises Outlooks to Positive for UnitedHealth Group Incorporated and Its UnitedHealthcare Subsidiaries. Accessed October 21, 2020
A.M. Best. "AM Best Affirms Credit Ratings of CVS Corporation's Aetna Subsidiaries". Accessed December 11, 2020