Health Insurance For Small Businesses and Self-Employed Individuals

One of the biggest challenges facing small business people and self-employed individuals is the high cost of healthcare. Often, the costs of health insurance are beyond the reach of a startup or relatively young business. Unfortunately, health insurance has become a necessity of life. One day in the hospital can easily cost from $3,000 - $5,000 dollars or more. The costs of a chronic illness or medical condition can be devastating. Last, but not least, is the fact that you cannot buy health insurance when you need it; you must buy it in advance, before any severe medical conditions manifest themselves.

This article will explain the major forms of health plans and provide some thoughts to help you get the maximum value for your healthcare budget. Before we go into specifics, I would like to point out that insurance is governed by each state rather than by the federal government. Therefore, there are wide variations in product availability, rates and underwriting rules from state-to-state. I will discuss general concepts regarding health insurance but I encourage you to check product availability and underwriting rules for your state by calling us at 800-955-0418 or by e-mail at info@wwins.com.

A general rule regarding health plans is that the more freedom of choice your plan provides, the higher the cost of the plan. You may have heard the term "managed care" used in this context. Managed care is a catch-all term that refers to restrictions or controls on your health plan which are designed to direct your choice of hospitals, physicians and treatments.

Let's look at the predominant health plan types in order to illustrate this rule:

Plan Type	Restrictions	Pros and Cons	Relative Cost
Traditional Major Medical	Free choice of hospitals, physicians and most treatments	Medical treatments/providers are "self directed"Benefits are payable at identical levels for any medical providers; costs are highDeductibles must usually be met before any benefits are paid	Highest
Preferred Provider  Organization (PPO)	Free choice of hospitals, physicians and most treatmentsLower benefit levels for out of network services	Benefits are payable at higher levels in network, lower levels out of networkPlans often feature low co-payments for in network services	Mid-to-high
Health Savings Accounts (HSA'S)	Similar to Traditional Major Medical although plan may pay reduced benefits if out-of-network providers are usedA tax deductible, tax deferred savings account may be established to fund costs of small claims but the account may need to be established with the insurance company's designated custodian	Family deductible must be met before any benefits are payableEveryday medical services/treatments are "self directed"Tax favored savings account withdrawals are available for nearly all medical, dental, vision, hearing expenses; withdrawals are tax free; early withdrawals for non-medical purposes require a 15% tax penalty	Mid-to-low
Point-of-Service Plan  (POS)	Free choice of hospitals and physiciansPrimary physician must be chosenPrimary physician acts as gatekeeper to other providersSome treatment restrictions may exist	Benefits are payable at higher levels in network, significantly lower levels out of networkPlans often feature low co-payments for in network services	Mid-to-low
Health Maintenance  Organization (HMO)	Provider choice restricted to network providers onlyPrimary physician must be chosen Primary physician acts as gatekeeper to other providersSignificant treatment restrictions may exist	Benefits are payable at very high levels in networkNo benefits are payable out of networkPlans often feature low co-payments and strong preventive care benefits	Lowest

I suggest that you view health insurance as a tool to help you manage the catastrophic costs of large claims. This is the principal on which health insurance was originally created. However, over the last fifteen years, health plans have gotten away from this principal and are now often designed to cover all costs of care including routine preventive services. It makes no more sense to buy a low deductible, low copay health plan than it does to buy an extended warranty on your car which covers the predictable, relatively low costs of oil changes, tire rotation, etc. In order for you to maximize the value of your healthcare dollar you should select a plan with the highest deductible that you can financially tolerate. Ask yourself, "If I had to pay my deductible tomorrow would it change my lifestyle?". If your answer is "no", then that's the plan you should consider. Use the premium dollars that you save (the difference between a lower deductible plan and the one you select) to practice good preventive care and a healthy lifestyle.
So, be smart with your health care dollar. Take control of your budget and take control of your health, too! You'll have a more profitable business, a healthier life and a health plan that's there when you really need it.