Health Insurance Companies and 5 Healthcare Options for Small Enterprises

The recent news of health insurance companies like Aetna, Humana, Athema, etc. getting merged is leaving a lot of speculations in the health insurance marketplace. While the practicing doctors and hospital authorities feel it will leave many of them in out-of-network facilities, there are many financiers who see this merger as a good possibility to reduce the cost of expensive health insurance in the USA.

But, what do the health insurance companies do? Or, how do they function. Mentioned below are a few ways health insurance companies or brokers help small scale employers with ideal sort of small group health coverage.

If you are an insurance agent or a small entrepreneur, you will feel like issuing the ACA to your employees/clients. However, if you are a company with less than 50 employees, you may not provide any health insurance to your staff. There are absolutely clear options provided for small group health coverage.

In 2016, you have 5 options mainly for providing health insurance to your employees:

1. Private Exchange
2. The SHOP marketplace
3. Co-operative
4. Small group plan (private)
5. Individual health coverage (you may or may not take defined allowance contribution)

1. Private exchange

Private exchange is the most sort about healthcare marketplaces today. When small employers go for private exchanges, they provide the employees with a set of pre-defined contribution towards different plans available. You can divide the options into either individual- or even group- health insurance plans. The biggest advantage in private exchange is the defined contribution planning.

Insurance agents either work with a private health insurance company or defined contribution and provide such options to smaller groups. There are innumerable small start ups and also new divisions of big names in insurance companies that offer these small group- or individual-health insurance.

2. The SHOP marketplace

These are marketplaces run by state- or Federal- exchanges that also sell group health insurance for small enterprises. SHOP can be a good healthcare exchange for all those employers who have 50 or less employees, provided they meet some essential criteria. For instance, Massachusetts requires employers contributing 50 percent of the total health insurance cost in SHOP. Those employers with staff strength between 1-5 must have cent percent employee enrollment, while with 6-50 employees, 75% of the employees need to be enrolled.

Small business groups that are eligible, SHOP provides access to tax credits exclusively available through its platform.

3. Co-operative

The co-op is a more like a traditional health insurance approach for all small groups. The main idea is- the co-operative will increase the purchasing power, the risk of which will be spread across a larger group. There is a different structure for every co-operative, and depending on the state’s underwriting laws plus the co-op, it can decide about providing better insurance rates than the SHOP or small group, to get into the open market.

4. Small group plan

Small groups also have an option of buying private plans from small groups. They may find further carriers and options to choose from within the private market just like SHOP. There are only some states that have such one to two small group plans to choose.

5. Individual health coverage (enrollees may or may not take defined contribution)

This is fairly a simple approach that has achieved results. It allows employees to buy individual health plans using a public exchange or even a broker. Employees have the option to select from any plan and carrier present in the marketplace. Individual employees can even get discounts on the paid premiums using the tax credits for individual health plans.

In an event where the small group employer wants to contribute towards his employee’s insurance premiums, can easily use the defined contribution allowances and assist his employees in paying the non-subsidized part of the insurance premium.

Health insurance companies generally involve to help in setting up those defined contributions and sell employees the individual plans. They thus act as consultants for these small entrepreneurs. This solution works best for small groups who are heavily priced out in any group health coverage. It also works well for those employers who are not eligible to provide group healthcare coverage, or those who wish to start for the first time. In case you do not have the administrative capability to use a group health insurance policy, you may go for individual health coverage.

For all the time, health insurance companies have been trying to help employers gather friendly group health insurance plans, so that they do not suffer maximum burden from this expensive industry. However, this was only possible as the number of companies were more, hence more competition. Now, with mergers happening and competitions going down, whether the health insurance companies keep their rates low is something everybody is curious about. However, companies like Aetna and Humana say they will be able to provide better rates in insurance premiums, as the hard work will be divided between two giants, not fighting each other but helping them instead.