Employer Health Insurance vs. Individual Plans for Small Business Owners
If you’re a small business owner, freelancer, or even just a full-time employee who’s thinking of striking out on their own, you’re probably wondering about health insurance. There are two main categories of health insurance that small business owners need to consider. If they have employees, these types of health insurance become more important than ever. These two types are employer health insurance vs. individual plans.
While there are a lot of misconceptions around the realities of health insurance, it’s important to recognize reality. An individual plan is any plan purchased by an individual, and it can be used to cover just one person or an entire family. On the other hand, an employer health insurance plan is purchased through the employer. If you’re a small business owner or freelancer, you need to understand these two types of coverage so you can decide what’s right for you.
Why Offer Health Insurance?
First, you’re probably asking why you should bother dealing with insurance in the first place. It’s a hassle, it’s expensive, and you’re probably already in relatively good health. All of these things are simply misconceptions. Insurance doesn’t have to be complicated or expensive, and it’s always a must-have no matter how healthy you currently are.
If you’re self-employed with no employees, you need insurance to protect yourself. If you’re not well, you can’t operate your business. With rising healthcare costs, one accident or health crisis could leave you in extreme debt.
On the other hand, not offering health insurance as a small business with employees also sets you up for failure. You know that healthy employees are happy employees, but did you also know that most job seekers care about these benefits over a lot of other factors? That means offering health insurance positions you as a top employer in your area, and you’ll have an easier time retaining your best talent.
Now that you know why having or offering health insurance isn’t optional, let’s talk about how to choose between employer plans and individual plans.
Employer vs Individual Health Insurance
If you’re self-employed with no other employees, you’ll need to opt for an individual health insurance plan. This can be purchased through the Healthcare Marketplace as well as through a private insurance agent. Otherwise, small businesses with employees can choose to offer employer coverage or encourage employees to search for an individual health insurance plan with employer benefits.
In the first situation of choosing employer health insurance, the employer will need to find an insurance provider. This is usually done through the Small Business Marketplace, a federal marketplace online for finding small business insurance. From there, the employer can find the right plan and provider.
Another option is for the small business to join with other small businesses in the area to apply for a group coverage plan. Because the employer will be expected to pay a portion of the employee’s coverage, applying as a larger group will give larger purchasing power and reduce costs.
Finally, don’t forget about supplemental plans. For both employer and individual health insurance, a supplemental plan will help cover additional costs that aren’t included in basic health insurance. Things like affordable dental plans and vision insurance should also be considered since these are just as important as traditional healthcare.
Which is Best?
There’s no one-size-fits-all solution. An employer plan will need to be organized through the employer, and this might be a bit more complicated, especially if you only have a few employees. However, banding together with other small businesses will help offset this cost and additional challenge.
On the other hand, an individual plan offers more flexibility, though it might come at a higher cost. Sometimes, you or your employees will be eligable for government subsidies which could reduce the cost of an indvidual plan. Either way, you’ll need to do research to calculate the costs of each for your specific situation.
Choosing the Right Option
As a small business, you already have a lot on your plate. You worry with so much of the day-to-day business operations, the last thing you want to do is tackle the challenge of small business insurance. In reality, it’s not nearly as complicated as it seems on the surface.
You have more options than you think. There are a lot of benefits to choosing either employer or individual health insurance. At the end of the day, the only thing that matters is that you’re taking the iniative to take care of yourself and your employees.