How to Choose a Health Plan for Your Business

Understand your employees’ needs

The composition of your workforce is a major driver when choosing a plan, including:

• Age range. Is your team generally younger, older or a mix of both?
• Family status. Do you have more single employees or employees with dependents?
• Compensation levels. What premiums and out-of-pocket costs are your employees willing to pay based on their income levels?
• Location. Do you have employees working in multiple states?

For example, a younger workforce made up primarily of single employees may prefer plans with higher deductibles and lower premiums. A workforce with more families may prefer plans with lower deductibles and more comprehensive dependent coverage. Whether you operate as a corporation or an LLC, these considerations are important when evaluating health insurance options for your small business.

Familiarize yourself with compliance requirements

Employers that sponsor a group health insurance plan must comply with several federal laws and regulations.

• Affordable Care Act (ACA): Applicable Large Employers (50 or more full-time equivalent employees) must offer affordable health coverage that meets minimum value standards and must complete required Internal Revenue Service (IRS) reporting.
• Employee Retirement Income Security Act (ERISA): Employers must maintain written plan documents, provide Summary Plan Descriptions (SPDs) to participants and operate the plan in the best interests of employees and beneficiaries.
• Consolidated Omnibus Budget Reconciliation Act (COBRA): Employers must offer eligible employees and dependents the opportunity to continue health coverage after certain qualifying events, such as termination of employment or reduction in hours.
• Health Insurance Portability and Accountability Act (HIPAA): Employers must protect employees’ health information and comply with privacy and security requirements for protected health information (PHI).
• Required Notices and Disclosures: Employers must distribute notices such as Summary of Benefits and Coverage (SBC), COBRA notices, HIPAA notices and other required participant communications.
• Nondiscrimination and Other Mandates: Plans may be subject to requirements related to mental health parity, the Genetic Information Nondiscrimination Act (GINA) and other federal benefits laws.

Employers must ensure their group health plans are properly documented, administered, reported and communicated while protecting employee health information and complying with ACA, ERISA, COBRA, HIPAA and other applicable regulations.

Learn the types of health plans available

Common plan structures include:

• Preferred provider organization (PPO): Flexible access to providers, typically with higher costs when members use out-of-network providers
• Health maintenance organization (HMO): Generally lower premiums and costs, with a more limited provider network and primary care coordination
• High-deductible health plan (HDHP): Lower premiums paired with eligibility for a health savings account (HSA)
• Exclusive provider organization (EPO): A middle-ground option between a PPO and HMO, with in-network requirements and no out-of-network benefits except in emergencies

Many employers offer more than one plan, giving employees the opportunity to choose the option that best fits their needs and budget. These options are typically available to most business structures, including LLCs, when comparing health insurance options for small businesses.

Set a budget and employer contributions

Cost is often the biggest factor for businesses when selecting a health plan. This includes how much they can spend per employee, how they will share premium costs with employees and how predictable they want costs to be from year to year.

Employers determine how much they contribute toward employee health insurance premiums and may vary contributions by coverage tier, such as employee-only, employee plus spouse or family coverage. Employers may also offer tax-advantaged accounts, including HSAs, flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs), to support employees in managing out-of-pocket costs.

Review and adjust annually

Health plans should be reviewed annually, as premiums may change, employee needs may evolve, regulations may be updated and company budgets may shift. Include this review as part of your annual business planning process to ensure it remains a priority.

Regular evaluations can refine your approach to offering employee health insurance, ensure your plan continues to meet the needs of your workforce and support long-term affordability.