Small business owners can buy health insurance for their employees through approved insurance companies with the Small Business Health Options Program (SHOP).
Employers may choose the types of benefit design, which influences whether an employee needs referrals to see specialists, can get out-of-network care and other factors. Three types of health insurance plans offered to small businesses are:
- EPO: Exclusive provider organization plans are often an affordable option. EPOs don’t usually require members to get primary care referrals to see specialists but they also often don’t cover out-of-network care.
- HMO: Health maintenance organization plans are generally much cheaper than other options, but they also have limitations not found in other plans. That includes needing primary care referrals to see specialists and not being covered for out-of-network care.
- POS: Point of service (POS) plans may allow you to get out-of-network care, but you generally need primary care referrals to see specialists and you must choose a primary care provider. These plans aren’t as common as the other types.
- PPO: Preferred provider organization plans are often the most expensive because they offer the most flexibility. That flexibility includes members not needing to get primary care referrals to see specialists and the ability to get out-of-network care.
Getting insurance through the SHOP Marketplace allows employers to offer health plans from multiple insurance companies and qualifies them for the Small Business Health Care Tax Credit, which can help with the cost of providing coverage.
Your business must meet these requirements to qualify for the SHOP tax credit:
- Fewer than 25 full-time equivalent (FTE) employees.
- Average employee salary is about $56,000 per year or less.
- Pay at least 50% of your full-time employees’ premium costs.
- Offer SHOP coverage to all full-time employees.
Small business owners can also work with a health insurance broker who conducts all plan research and comparisons to find the best plan for your business at no additional charge. Or they can buy directly from a health insurance company.
If you buy coverage through the ACA marketplace, plans are organized by “metal” tiers: bronze, silver, gold and platinum. The tiers differ by premiums and out-of-pocket costs. For instance, bronze and silver plans have low premiums but higher deductibles and coinsurance. Gold and platinum plans have high premiums but lower out-of-pocket costs.
Employers have flexibility in which type of plans they choose to offer their employees.
