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Today, there are excellent, low cost policies available that provide good value but you have to analyze the plans closely. As an entrepreneur you have unique and important considerations when selecting small business group health insurance for yourself and potentially your employees. The issue is that many insurance policies are needlessly expensive and inefficient. Larger companies will often buy lavish health insurance and are assisted in this because they receive discounts resulting from the leverage they achieve bringing a large number of employees to the health plan. As a small business person buying group health insurance you will not have these advantages. You will need to evaluate the cost and value very closely. There are a few important metrics to understand and use to balance the economic benefits of health insurance with the cost of health insurance. The most important point for the entrepreneur to keep in my mind is that you must compare the value of a low cost plan against a high cost plan. The low cost plan will offer low benefits and the high cost will offer higher benefits. The problem is that you must analyze whether those higher benefits justify the cost of the higher cost plan. The key here is that the high cost plans will provide very low cost for the regular medical needs and other benefits. Things such as copayments for doctor visits and emergency room visits will be low. Also, with high cost/high benefit plan you may be allowed a large number or even unlimited doctor visits. In contrast, with lower cost plans, the number of visits will be limited. The problem with the high benefit plans is that the monthly premium cost is so high that the savings you may receive have from low cost of copayments as well as access to healthcare services is far lower than the extra money you spend every month on the high cost/high benefit plan. As a simple employee, you do not have this incentive to balance the cost of the health plan with the benefits provided. This is also, incidentally, a key problem in the American health system in general. An employee may pay some small portion of the healthcare cost every month but its not a situation where the employee will need to smartly economize on the heatlh plan choice. Small Business Group Health Insurance Analysis
As you can see, the two plans over very different benefits and as a result very different cost. You will need to examine the difference in benefits and weight the benefits of the higher benefit plan with all the extra money it will cost. In the example shown, the monthly cost difference is $300 per month. Over 12 months then you will pay $4,800 (12 x $400) for the high end plan and only $1,200 (12 x $100) for the low end plan. The difference of $3,600 will only be worthwhile only if you actually utilize services over those twelve months greater than $3,600. Keep in mind that the high end plan provides “peace of mind” if something big happens because the annual deductable is so low--$1,000. Final note about small business group health insurance is that when it comes to providing insurance for employees, I feel that it is very important to make sure that they feel some of the pain of what health insurance costs. In fact, most of the “problems” in healthcare can be traced back to the fact that people who purchase healthcare don’t really pay for it. So the people who are consuming healthcare never make the critical economic decision about care that works in every other aspect of the massively successful U.S. economy.
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