There are over 27 million self-employed entrepreneurs and micro-businesses in the United States. If your small business is anything like the other 27 million, you’re probably struggling with the constant upheaval in the health insurance market. Now is the time to review your small business health insurance.
What should you be looking for in small business healthcare coverage?
- If you are insuring yourself or just your family, you’ll want to review your current health care needs.
- Does anyone in your family need to see a doctor or specialist on a regular or frequent basis?
- Do you currently have prescriptions for yourself or family members?
- What about bigger ticket items such as planning for a baby or needing a surgery in the coming plan year?
Answers to these questions can help you determine how much insurance you’ll need and where the break-even point is between premium costs, the initial cost of the plan, and other plan costs such as copayments, amounts you pay towards a service, and coinsurance and deductibles, the portion you are responsible for before your insurance kicks in. All of these costs add up to your total costs for the plan. The more you know before you start, the better prepared you’ll be to make a solid financial choice.
Small business Health Options Programs (SHOP) and Health Care Exchanges – Are you insuring just yourself or do you have employees to cover as well? If you are just looking for insurance as a self-employed individual or family, the healthcare.gov website is a great starting place. Created as part of the Affordable Care Act, the SHOP exchange allows you to review health plan offerings in your state, including prescription drug coverage, copayments for things like doctor visits, specialists and lab tests along with more major events like maternity care and surgery. If you have changes in your healthcare needs since last year, taking a look at these differences can significantly impact your bottom line each month.
Private Healthcare Exchanges â€“ Unlike the public exchanges, private exchanges are just that, private. You can elect to join a private exchange and then select how much coverage you are willing to pay for your employees, also called Defined Contributions. Employers agree to a set dollar amount, say $750 a month and then employees can shop the exchange and select the plans and coverage levels that best suit their needs. Employers can put restrictions on how the dollars are spent, for example, $500 must be spent on medical insurance and then the remaining funds can be spent on other coverages like dental, vision or voluntary insurances, or the employee may have the option to spend the dollars any way they see fit on the exchange.
Direct Insurance – Offering insurance to your employees? There are rules in the Affordable Care Act about the type of insurance plans that you can offer your employees. The plans must offer a minimum essential coverage (MEC) for items such as preventative care, annual physicals, child well visits, mammography and other services. You can shop for these plans yourself, which means that you’ll also be responsible for all paperwork, open enrollments, claim issues, eligibility and billing, or enlist the help of an insurance broker. Additionally, some insurers don’t sell small group insurance on a direct basis, so your options may be even more limited without the help of a broker. If your business belongs to a trade association, there may be additional insurance buying power available.
While health insurance may seem confusing and overwhelming, know that help is out there. Start by working your budget and understanding your basic health care needs. From that point, you can make decisions about the type, level and individuals you’ll be covering.
PASBA member accountants bring the collective resources of a nationwide network of Certified Public Accountants, Public Accountants, Enrolled Agents and other practitioners available to answer your tax and financial questions and streamline your business accounting, bookkeeping, and payroll operations.
To find a trusted accountant in your area, visit www.SmallBizAccountants.com.
Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this article, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. Any information contained in this article does not fall under the guidelines of IRS Circular 230.