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Article added or updated:
03/30/2008 |
Health Insurance Basics for Micro-business
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| 09/20/2006
Related Reading:
Health
Insurance How-To
Health Quote
Insurance
Suggestions
Self
Employed Health Insurance Problems
Self Employed Health
Facts
Self Employed
Health Facts 2
Self Employed Health Insurance
Plans
HSA Explained
HSA / HRAs For Dummies
Health
Insurance 101
As a business owner with 10 or fewer employees, you confront many
financial challenges. But none are more daunting ─ or more important ─
than finding and keeping affordable, quality health insurance. Saddled
with bills for office space, computer equipment, and business supplies,
you may be tempted to go without. But before you forgo coverage,
consider this: illnesses and injuries trigger half of all personal
bankruptcies in the United States. Even a relatively minor accident or
illness can cost you thousands of dollars out of your own pocket. Health
insurance should be an integral part of your financial protection
planning. Shopping for health insurance is often frustrating and
confusing, complicated by the fact that health insurers and medical
providers have their own terminology. In addition, each state has its
own rules and regulations for various products and funding arrangements.
However, if you do your homework ─ the same way you would as if you were
buying a brand new home or a car ─ you should be able to find a
satisfactory coverage option
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Group Power
Anyone who belongs to a wholesale shopping club knows you can get a
better deal when you buy in bulk. The same is true for health insurance.
You'll pay lower premiums if you're enrolled in, or sponsoring, a group
health plan.
This is why many small employers have joined forces to create group
purchasing alliances. The best way to locate a purchasing coalition is
to visit your state�s Department of Insurance (DOI) website, or call
your DOI directly. The National Association of Insurance Commissioners
has a list of state DOI Web sites at www.naic.org. In addition, you can
contact your local Small Business Development Center (www.asbdc-us.org)
or Chamber of Commerce. Many chambers serve as group health purchasing
coalitions themselves. Both your local Chamber and Small Business
Development Center can steer you in the right direction.
Group Health vs. Individual
Health
Insurance Coverage
When it comes to health insurance, it pays to be part of a group. Group
premiums are cheaper because insurers spread the risk of claims over a
greater number of people. Most group plans are offered as part of a
comprehensive employee benefits package, but they can also be purchased
through professional associations, trade unions, or churches.
Sold directly to you, individual insurance may be a good choice if
you're self-employed and can't otherwise join an association, or you
work for a company that doesn't offer benefits.
If these options prove unsuccessful, investigate whether you can form
your own group. In some states, self-employed people can form a group
with as few as two employees, including yourself, as long as your
business meets certain criteria and you pay the employer's share of
social security taxes for your employees. A few states permit a �group
of one, but you will most likely have to submit tax forms to prove
you're a legitimate business.
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If you do need to buy individual health insurance, the medical
underwriter's spotlight will be tightly trained on you. Any pre-existing
condition, such as asthma, diabetes, heart disease ─ even pregnancy ─
can nix your application, boost your premiums, or cause the underwriter
to exclude coverage of some conditions altogether. A few states mandate
that individual health insurers must offer everyone a policy regardless
of their health history. While these states ensure that everyone has a
right to purchase health insurance, they don't guarantee that everyone
will have the ability to pay for it. Individual health insurance
premiums in states with guaranteed issue can be astronomical.
Know Your ABCs
Whether you end up buying an individual health insurance plan for
yourself or a small group health plan for you and your employees, you
should know there are several plan design variations to choose from.
These include indemnity or fee-for-service plans (FFS), preferred
provider organizations (PPO), point of service plans (POS), and health
maintenance organizations (HMO.) Each plan design has its own pros and
cons that you must weigh before making your decision.
Fee-for-service or indemnity plans typically give you the most
flexibility. You can see any provider you wish without a referral.
However, you will probably pay more out-of-pocket expenses and higher
premiums. Managed care plans (PPO, POS, and HMO) operate differently.
They use networks of contracted physicians, hospitals, and other
providers that have agreed to provide comprehensive health care services
to the plan's members. Most managed care plans require you to seek
treatment only from their network providers. Others pay for care from
any provider, but offer you financial incentives to stay within their
network. In exchange for greater patient volume, the network providers
agree to charge lower rates. With a managed care plan, you generally
trade provider choice for increased affordability.
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