The cost of a health insurance plan would be the main criteria when a small business thinks of getting one. And with the economic depression, a lot of companies are looking for ways to reduce their bills from their balance sheet.
A group coverage plan will require the payment to be shared by both the employer and the employee. A typical group coverage plan in California will cost around 3100$ per employee. But before you jump, do realize that it has to shared between the employer and the employee.
Out of this cost, the employer has to pay around 50 to 80%. However there are some insurance plans which allow the employer to pay as little as 25% also. The estimate given above is an average number. There will be a lot of health plans for much lesser and much greater cost than what was mentioned. And last but not the least, whatever the employer pays as premium as tax deductible. Normally health care costs in an average business are around 10% of business cost.
Normally, an employer should set aside around 1500$ to 2500$ per employee, per year. But do remember that smaller business will get charged a lot more for their insurance coverage. This includes all those employers with less than 5 employees. And in such cases you need to increase the aforementioned figures by 10%. And also do remember that the premium cost of each employee will increase by 10% every year for at least 3 years.
Apart from the direct costs associated with health care, there are other costs too. There is a need for a large amount of paper work and administration. All this will usually be handled by the human resources department. The general work would include adding/removing family members from the policy,(due to deaths, marriage, child birth etc), filing insurance claims on behalf of employees, paying insurance premiums on behalf of employees. And sometimes brokers offer such services. But you need to keep in mind that if you do have a talented workforce, you can do it yourself for a much lesser cost.
Now we come to the cost of the plan itself. Broadly speaking you have two options. You can either go with a HMO (health maintenance organization) or a PPO (Preferred provider organization). HMO’s offer much less flexibility compared to the PPO. But they are much cheaper too. In HMO, you will be asked to select a primary care physician (PCP) who will refer you to other specialists if and only if you need special care. But with a PPO, you are given the freedom to use your discretion to decide whether you want to venture outside your network.
And of course, you should compare quotes online for small business insurance before purchasing.