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Small Business Employee Benefits and HR Blog

An Online Alternative to Small Business Health Insurance

As small business health insurance costs continue to rise, employers are looking for ways to offer health benefits at a lower price. An online alternative, often referred to as a defined contribution health plan, allows an employer to name its price. Rather than paying the costs to provide a specific small business health plan (a "defined benefit"), employers instead fix their costs by establishing a monthly dollar amount (a “defined contribution”) that employees choose how to spend.

Overview of Small Business Health Insurance

Small business health insurance plans are a form of employer-sponsored health coverage. Costs are typically shared between the employer and the employee, and coverage may also be extended to dependents. In certain states, self-employed persons without other employees may qualify for group health insurance plans. There are several different types of small business health insurance plans available. 

However, many small businesses can’t offer small business health insurance coverage due to rising costs and restrictive minimum contribution and participation requirements. 

Why Small Businesses Should Switch to Online Defined Contribution Health Insurance Plans

Businesses typically buy small business health insurance on an annual cycle and spend tremendous amounts of time each year evaluating the features of the various plans offered—time that should be spent on improving products or servicing customers. 

As health care reform phases in, almost every employer should simply cancel its group health plan and allow employees to use pre-tax funds to buy their own individual policies. This is especially true in the small employer group market where several insurance companies have strategically chosen to exit the small group market and increase sales in the individual market.

What most business people don't realize is that the 2010 federal health care reform has standardized most health benefit plans—all U.S. individual policies now have no lifetime limits on coverage, pay 100% of the cost of preventive care, cover adult children up to age 27, and now guarantee coverage to dependents under age 18 with no extra charges for pre-existing conditions. In 2014, insurance companies will no longer be able to decline individuals for individual health insurance based on a pre-existing medical condition. 

Also, starting in 2014, massive tax credits will be available to help you buy individual health insurance coverage through new state-based health insurance marketplaces. The tax credits will only be available to you if you enroll in health insurance through your state's health insurance marketplace. If you are eligible for these health insurance tax credits, they will cap your cost of health insurance at 2% - 9.5% of your household income.

An online defined contribution solution allows an employer get out of the health insurance business, so they can focus on their customers.

Here are 4 Simple Steps To Switch to The Online Alternative - Defined Contribution

 

Step 1 - Cancel your group health plan.

 

Step 2 - Define any amount you can afford. 

 

Step 3 - Select an Insurance Professional of your choice to help each employee find the right individual policy.

 

Step 4 - Utilize online administration software to reimburse employee tax-free.