Employee Benefits

The best healthcare for small business depends on a number of factors:

Coverage: Ensure the plan covers essential health benefits and fits the needs of the majority of employees.

Cost: Consider both the premium prices and any potential out-of-pocket expenses for employees.

Network of providers: Verify the insurance network includes your employees’ preferred medical facilities and providers.

Provider reputation: Check the insurance company’s reputation for paying claims promptly and fairly.

Plan flexibility: Look for a plan that offers choices for deductibles, copays, and coinsurance amounts. 

Employee contributions: Decide the amount of the premium that you and the employee will each play. 

Enrollment and administration process: Consider the ease of enrolling employees and the efficiency of the insurance company’s administrative processes.

Small-group insurance rates vary widely. Monthly premium costs are based on a handful of key factors:

• Demographics and location of the business
• Type of plan and coverage
• Carrier selection
• Employee census

Minnesota requires employers to cover at least 50% of the total premium cost. (Employers, however, may choose to pay more.)

There are two main types of group health insurance plans: preferred provider organization (PPO) and health management organization (HMO). A PPO allows employees to select from a list of providers in their area. If employees choose providers outside that list, they are covered but at a lower rate. With an HMO, employees must use the providers in their network. If they use an out-of-network provider, they won’t be covered.

Not always. Each group health insurance plan offers different benefits. Some companies include these as employee benefits. Dental and vision insurance can also be purchased separately as stand-alone policies.

It depends on the organization being insured. Typically, small businesses find group plans to be the most cost-effective approach. Group health insurance plans for small businesses tend to have a lower per-person cost than individual plans. This is due to the tax benefits for employees and employers and employer contributions. 

In the last few years, the popularity of level-funded insurance has grown among small employers. Think of level-funded insurance as a hybrid between self-funded and fully funded insurance (i.e., traditional small group insurance).

In a level-funded model, the employer still pays monthly to a third-party administrator or carrier. However, rather than a “use-or-lose” fixed premium — like with small group insurance — the premium is held by the carrier and used to pay employees’ claims throughout the year.

At the end of the year, a portion of unused funds are refunded to the employers (minus administration fees and payments on stop-loss insurance). Stop-loss insurance covers the difference if the total claims are over the limit.