Small business owners can purchase health insurance for their employees through approved insurance companies through the Small Business Health Options Program (SHOP).
Employers can choose the type of health insurance plan that determines whether an employee needs referrals, can get out-of-network care, and other factors. There are three types of health insurance plans available to small businesses:
- EPO: Exclusive Provider Organization plans are often an affordable option. EPOs usually do not require members to get referrals, but also often do not cover out-of-network services.
- HMO: Health Maintenance Organization plans are usually much cheaper than other options, but they also have limitations that other plans don't have. These include requiring a referral from your primary care provider to see specialists and not covering out-of-network care.
- POS: Point of Service (POS) plans may allow you to get out-of-network care, but you usually need a referral from your primary care provider to see specialists, and you must choose a primary care provider. These plans are not as common as other types of plans.
- PPO: Preferred Provider Organization plans are often the most expensive because they offer the most flexibility. This flexibility includes not having to get a referral from your primary care provider to see specialists and being able to get out-of-network care.
Getting insurance through the SHOP Marketplace allows employers to offer health plans from multiple insurance companies and makes them eligible for the Small Business Health Care Tax Credit, which can help cover the cost of insurance.
To qualify for the SHOP tax credit, your business must meet these requirements:
- Fewer than 25 full-time employees (FTE).
- The average salary for employees is about $56,000 a year or less.
- Pay at least 50% of your full-time employees' insurance premiums.
- Offer SHOP insurance to all full-time employees.
Small business owners can also work with a health insurance broker who will research and compare all plans to find the best plan for your business at no additional cost. Or they can buy insurance directly from a health insurance company.
If you buy coverage on the ACA marketplace, plans are categorized into "metal" levels: bronze, silver, gold, and platinum. The tiers differ in premiums and out-of-pocket costs. For example, bronze and silver plans have low premiums but higher deductibles and coinsurance. Gold and platinum plans have high premiums but lower copayments.
Employers have flexibility in choosing the type of plan they want to offer their employees.