Small Business Owners Pay Too Much For Health Insurance
There’s a huge misconception out there that if you own a business, you get a better deal on health insurance. The fact is, many “group” health insurance plans come with higher price tags than individual health policies.
For the small business owner with 5-7 employees or less, offering to reimburse employees for their individual health insurance policies through an HRA (Health Reimbursement Arrangement) can prove a significant cost savings to the business, while giving more freedom of health insurance plan choice to their employees.
In addition, the employees ‘own’ their individual plans, which means there’s no need for COBRA coverage if they leave their current employer. Since businesses smaller than 20 employees do not offer COBRA coverage anyway, individual plans become even more attractive.
The biggest advantage of individual health plans over small group plans is price. Individual health plans typically offer lower premiums than similar group plans. The reason is risk. Individual health insurance in Washington State requires a health risk questionnaire be completed as part of the application process. The purpose of the health questionnaire is to ‘weed out’ the higher risk applicants with significant health risks.
Most people pass the questionnaire with ease. When they do, they fall into the same group as everyone else who also passed the same questionnaire, which represents a lower ‘risk’ to the insurance company, thus lowering rates. (Those who do not pass the health questionnaire are provided the opportunity to sign up on the Washington State Health Insurance Pool, a high-risk pool with significantly higher premiums) If a business has an employee who does not pass the health questionnaire, then it can still prove less expensive to cover the high risk pool premium for that individual employee versus paying higher group rates for all employees.
Group plans in Washington do not have a health questionnaire, so the insurance company has no way of ‘weeding out’ the unhealthy employees. The rates have a ‘built in’ risk factor, whether warranted or not, because the insurer has no way of separating the high risk groups from the low risk. Groups of 2-50 employees are ‘community rated’ meaning they are in the same risk pool whether their employees have low utilization or high. Therefore, the small business with healthy employees ends up paying a higher rate because of other businesses who may have employees with expensive high risk chronic health problems.
Offering individual health plans to employees comes with more advantages than just lower price. They also come with less administration. Unlike ‘group” plans, there are no ‘renewals’ each year to go through, no minimum participation requirements imposed by insurance carriers, and no minimum employer contribution requirements, either. Employers still have the ability to define eligibility, probation periods, and can design their health benefit package with more options and flexibility.
The Washington Health Insurance Agency has been providing creative solutions like this to small business owners for years. Give us a call at 360-464-1622 to find out if you’re paying too much for your health insurance coverage or fill out our business quote form for a free cost comparison at http://www.washingtonhealthinsuranceagency.com/health-insurance-for-business
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Help answer the question about health plan
Why do the people not have the same health plan and pension?That the government has. AIG will not be allowed to go under, the government has their pensions with AIG. Are the government workers not the servants of the people as they are always saying? Would Ted Kennedy be alive now if his health plan was in effect? Answer — not likely.
@teknoguy2002 Yes, I agree, the people who have completely legitimate reasons for health care should have it, but just until they are back on their feet. We shouldn’t give it to people who just don’t try. We are heading in a direction that all health care will be controlled by the government. I don’t mind us helping one another for short periods of time but health care is a private business and the government should interfere as little as possible.
@pcsassy03 Well what do you expect? Shes just misdirected. Shes focused in the wrong direction, smart yeah.. But its in vain when misdirected.
It is dangerous, problem is a lot of his friends voted for Obama and now they are paying the price. The time has come to where the more successful you are the more you are punished. I am not rich by any means, but there is a reason people from all over the world aspire to come to the United States and that is the American Dream. Everyday Obama, Pelosi, and Reid are destroying it more and more, until we will be left with a bunch of dependent unemployed americans who can do nothing for themselves, because to do anything would be more of a burden than it is worth.
Let me remind you that in this nation we do not rely on natural resources like other rich nations. We solely rely on our economy and production. Therefore who riches and the money used by our government comes directly from our tax money. I do not see why the government should SUPPLY health care to everyone with other people money. Mind you i do not have health insurance so you would think i fell in the category of supporters. yet i do not.
because in reality the main problem is greed and cost, but as usual our government instead of facing the real issue and fight it tries to find a way around it and do a patch work instead. and there is only one simple reason to that … because every single politician has at least one hand in some lobbyist or great health company's pocket. and everybody knows that you do not bite the hand that feeds you.
Stop charging thousands in premiums, stop paying high management millions of dollars in salaries, stop spending millions if not billions in adds and commercials promoting this or that brand of medication, stop abusing the system simply because you can and finally … stop ripping off your own people because you are greedy.
THAT should do it … now who has the cojones to face the music? … no one.
@dland95 Charities are all well and good, but they jsut don’t end up helping everyone who needs it. Not by a long shot.
Let’s say I get laid off this week. I’ve been paying taxes all my life, paid into SS, and even have health insurance. After I lose my job, I no longer have my health insurance. If I get sick, I can’t afford to pay for it because I just lost not only my job, but my insurance as well.
I see where you’re coming from, and I do agree, some people just shouldn’t be helped.
We have the best health system in the world so why destroy that health care. They are not looking for cost solutions they (the Obama Administration) is looking for control.
The main cost is malpractice insurance. They have done nothing to lessen cost but have made it cost more money to our national debt.
To answer your question
Reduce malpractice costs
Help pay for research
Help with testing costs
Make insurance company comply to new regulations on responsible care for everyone and no more profiling.
WE want quality over regulations.
The government could help sponsor states to put in clinics in low income areas that would insure if they needed a specialist they would get that care with tax and other incentives.
Health care is not the villain–Lawyers and insurance need more written ethics.
@teknoguy2002 I do see your point about people who can’t afford it. I don’t see a reason why other people should pay for it when the uninsured can’t. That’s what charities are for.
The thing is, people that are uninsured generally didn’t apply themselves. They never tried to make something of their lives and as a result didn’t make enough money to pay for insurance in case something happened to them. When something does happen, they come whining saying how they have never had a chance. They have always have had a chance and never took it. So now the productive, tax paying members of society have to pay for someone not feeling like applying themselves.
She has valid concerns, as do all the people opposing the bill. But the long and short of it is, Rep. Grayson had a very good point. If you get hit by a bus, and you don’t have insurance, you have to pay all the medical expenses. If you have a job it’s not a problem, but you could lose it as a result of the accident. Then even with a payment plan, you can’t afford to pay. The hospital system then ends up footing the bill. People need to be responsible for themselves, not leave it to chance.
@dland95 Some people just can’t afford Health Insurance. Some people who CAN afford the insurance don’t get it, because even if they had it they can’t afford the copay. It’s not about who applies themselves, except in the case of extreme laziness, but I think that is actually rare.
Some people don’t get health insurance just because they don’t want to. Fine by me, but if something happens, there should be some guarantee to the healthcare system they go to for care that they will get paid.
@dland95 (Sorry only needed like 40 more letters)
But for the most part, the uninsured aren’t that way by choice. And even then, they’ve been paying taxes just like everyone else.
“everyone NOW has access to healthcare”, the emergency room; is like saying, if everyone has a gun, we don’t need government intervention and force a dept of military on us.
Obama, if he makes office…promised 1000k to every American and bill pay for this thru taxes on the oil companies (triple digit profiting)
Afforable Universal Healthcare for everyone and even those who have pre-exisiting conditions.