How to Choose the Best Health Insurance for Small Business Owners

Finding good health insurance is one of the most frustrating parts of being an entrepreneur or small-business owner. Until December 15, when the federal open enrollment period is open, health insurance will be one of the most frequently discussed topics among small-business owners. It’s also an area without an easy-to-understand reference to options or collection of information about what options other people are using to help you make the best choice for yourself.

Most people know that a law called the Affordable Care Act, which many people refer to as Obamacare, created a marketplace at Healthcare.gov for insurance that complies with the law’s requirements. Most people can shop for health insurance on the site by going to this health insurance selection page and selecting their state. If your state is one where you can buy directly on Healthcare.gov, the site will walk you through comparing and selecting plans. A minority of states have their own separate websites. If you’re in one of the states with its own health insurance marketplace, Healthcare.gov will redirect you to the right page after you select your state.

To complicate things, the Affordable Care Act has been under attack by Congress, in courts, and by Presidential Executive Orders almost since it was enacted into law, so the health-insurance options most people know to be available have gotten prohibitively expensive and even more confusing, because there’s no telling when things will change.

That said, our options for 2018 aren’t likely to change anytime soon, so I reached out to clients and friends about what they used for healthcare, where they got it, when they can buy it, and how much they pay.

My goal was to share real information about what entrepreneurs and small-business owners are doing for health insurance. Here are the options to check out to find the best health-insurance options for your business and your family.

1. Traditional Health-Insurance Plans

Traditional health insurance plans fall into individual and business plans, which generally carry the most expensive monthly premiums and provide the most benefits. The variations in costs generally relate to the details of each of the defined terms above, the steps you need to take to see a specialist, and whether out-of-network doctors are covered.

Where to buy traditional health-insurance plans:

Traditional health-insurance plans can be bought in the following places:

 
When to buy traditional health-insurance plans:

Most people buy traditional health-insurance plans during open enrollment, which for 2017 is November 1 through December 15 unless you have a special event like the loss of other health insurance coverage, get married, have a baby, move to a new zip code or state, or certain other listed special circumstances. Businesses with between 1 and 50 employees can buy business insurance plans at any time.

How much people are paying for traditional health-insurance plans:

The monthly premiums for small-business owners I surveyed who had a traditional health insurance plans for 2017 and 2018 ranged from about $500 per month for a single person to almost $2,500 per month for a family plan.

Here are some specific examples of the premiums people reported paying for traditional health-insurance plans:

  • $474 per month for a single woman (her plan is increasing to $714 per month for 2018)
  • $500 per month for a single woman
  • $750 per month for a single man
  • $800 per month for a single woman
  • $1,800 per month for a family plan
  • $2,000 per month for a married couple
  • $2,500 per month for a family plan

 
Sometimes you can save money with a group plan if you’re able to get insurance through a trade association, union, etc. For example, one person indicated they paid a little less than $1,000 per month for a two-person plan with a $500 premium, so definitely check that out. Another single person had a great group plan with a $465 premium.

This is obviously an expensive option, but it’s generally what people are used to for insurance and has the most coverage.

2. High-Deductible Health-Insurance Plans

These plans are similar to the low- or no-deductible traditional types for coverage, with one big difference that they come with a deductible of at least $1,300 for an individual or $2,600 for a family. Some plans are much higher than that, however.

High-deductible health-insurance plans are designed to encourage people to manage their use of doctors to save money, putting a greater burden of the first trips to the doctor on the patient, not the insurance company. Thus, high-deductible health-insurance plans are often a great choice for people who are healthy, or at least those who don’t go to the doctor whenever they get a cold. They might not be a great choice for a big family with young kids spreading germs in school or for people under chronic care who will be guaranteed to hit that high deductible every year.

Where to buy high-deductible health-insurance plans:

High-deductible health-insurance plans can be bought in the same places as traditional low- or no-deductible health insurance plans, including:

 
When to buy high-deductible health-insurance plans:

These plans follow the same rules as the traditional health-insurance plans, with the same November 1 through December 15 open enrollment period unless you have a special event like the loss of other health-insurance coverage, get married, have a baby, move to a new zip code or state, or certain other listed special circumstances. Again, businesses with between 1 and 50 employees can buy business-insurance plans at any time through the business-insurance page.

How much people are paying for high-deductible health-insurance plans:

Because you will be responsible for the first $1,300, $2,600, or more of your health insurance, your monthly premium for a high-deductible health-insurance plan will generally be lower than a traditional health-insurance plan with the same coverage with a low or no deductible. That said, monthly premiums can still be high. The ranges shared by small-business owners ranged from about $300 per month for a single person to $2,400 per month for a family plan.

Here are some specific examples of the premiums people reported paying for high-deductible health-insurance plans:

  • $320 per month for two people with a $2,500 deductible
  • $600 per month for a single person with a high but unspecified deductible
  • $750 per month for one person with a $5,000 deductible
  • $870 per month for a family plan with a $6,500 deductible
  • $1,300 per month for a family with a $12,000 deductible
  • $1,500 per month for two people with a $13,000 deductible
  • $1,650 per month for a family plan with a $5,000 deductible
  • $1,700 per month for a family with a $5,000 deductible
  • $1,900 per month for a family with a $14,000 deductible
  • $2,000 per month for a family with a high but unspecified deductible
  • $2,400 for a family with a high but unspecified deductible

 
Like traditional plans, these can be costly, but they prevent you from ending up with hundreds of thousands of dollars or more in medical bills if you have an emergency. They generally work better for people who don’t use a lot of medical services in a typical year.

3. Medical Cost-Sharing Plans

Medical cost-sharing plans are a bit of an unknown to many small-business owners or entrepreneurs. Technically, they’re not even health insurance as we know it. Essentially, these plans are just a managed collection of people who get together and help each other pay health expenses.

Generally, the way it works is the members can go to any doctor they want. When they get there, they say they’re a cash buyer and ask for a discount. They may mention their cost-sharing plan to give more detail, but insurance isn’t involved at all, although some plans do have in-network providers. In addition, providers will often but not always give a discount if the patient asks. Either way, the patient pays the practitioner directly or agrees to a payment plan, and submits the receipt to the cost-sharing or hybrid management plan administrator for reimbursement once they surpass any deductible they have. They are also subject to any other rules of their specific plan.

Because they’re technically not health insurance, these types of plans get to set their rules, which many times limit what expenses are covered, such as pre-existing conditions. This also comes into play because many health-share plans are organized around religious organizations. Many Christian-based cost-sharing plans, for example, only cover expenses that are consistent with the Christian faith. Thus, they may exclude reimbursement or sharing relating to smoking, certain pre-existing conditions, birth control, or vaccinations.

They also sometimes offer sharing only up to an annual maximum amount, so be sure to check closely for what’s excluded if you’re considering a medical-cost-sharing plan. For those plans, you can purchase a separate add-on to cover expenses beyond the annual max.

Where to buy medical-cost-sharing plans:

You won’t find medical-cost-sharing plans in a traditional health-insurance marketplace or through a health-insurance broker. Here are some of the most popular places you can learn more about specific plans and even buy one if it’s a good fit for you:

 
When to buy medical-cost-sharing plans:

The short answer is whenever you want. There’s generally no open enrollment period for cost-sharing plans, and you can subscribe at any time.

How much people are paying for medical-cost-sharing plans:

Many people responded that they were a part of a medical-cost-sharing plan. The costs of the plans were much lower, ranging from just $45 for catastrophic coverage to $900 per month for the higher-end medical-sharing plans. Here are some specific examples of the premiums people reported paying for medical-cost-sharing plans:

  • $111 per month for Medi-Share single plan with a $10,000 deductible
  • $212 per month for Medi-Share family plan with a $10,000 deductible
  • $240 per month for Medi-Share family plan with a $10,000 deductible
  • $320 per month for Medi-Share couple plan with a $2,500 deductible
  • $449 per month for Liberty HealthShare family with a $1,500 deductible
  • $499 per month for Liberty HealthShare family plan with a $1,500 deductible
  • $900 per month for Medi-Share family plan, with an unspecified deductible

 
As you can see, shared plans can come at a much lower cost, but they’re not without their trade offs. If you’re looking for a way to lower your healthcare costs, they’re definitely worth checking out.

How much are you spending on health insurance?

Health insurance will likely continue to be a struggle for entrepreneurs and business owners. The best advice I can give you is to evaluate all your options and choose something that works well for your family. If you’re young, single, and healthy, you might find a health-sharing plan that fits you well and saves you a ton of money. If you’re a family with pre-existing conditions and high medical costs, a traditional plan might be the best for you.

The best thing we can do is continue to stay on top of the options we have to help each other find the best plans for each situation, so share what you’re doing for healthcare in the comments to help fellow entrepreneurs and small business owners!

 

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Hi I’m Jaime. Each and every week I bring you the top business advice from the people who know best.

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