Small Business Guide: How to Switch Health Insurance Plans
October 5, 2022
And 6 Reasons You Should Rethink Your Employee Health Benefits
While we know that providing health insurance is one of the best ways to attract top talent and improve employee satisfaction, sometimes a small business may discover that the health insurance plan they have just isn’t a good fit. While switching may sound daunting, never fear —it’s not as hard as you may think.
In fact, it’s actually easier for small employers to change their group health plan than it is for someone self-employed. We are here to help guide you through the steps of switching your employee health insurance. We’ll also cover some reasons why you may find yourself asking if there isn’t a better plan out there for your small business.
Why would you switch your small business health insurance plan?
Your current plan is becoming too expensive. When you insure with the big insurance companies, such as Blue Cross Blue Shield, Aetna, United Healthcare, and similar, the chances are good that costs will continue to rise. (That’s been the trend for the last two decades!) Along with rising general insurance costs, more claims drive up monthly premiums. These rising costs may make it harder for you to offer coverage or for your employees to even afford it. If you find yourself in a situation where rising premium costs or high deductibles are making decent coverage out of reach, you should reevaluate your insurance carrier.
Your employees are unhappy with their plan options and healthcare coverage. This should be a no-brainer, as it goes against the main points of providing a group health insurance plan: giving employees resources to take better care of their health and improving employee satisfaction with their jobs. You may hear complaints about the insurance plan from the employees or your HR representative, but why wait? It’s a good idea to send out an employee survey periodically to gauge how well they feel the health insurance plan is meeting their expectations and needs.
Your current health insurance plan doesn’t seem like it covers any services or benefits. This point is related to point #2. If a health insurance plan does not cover popular services or if employees are disgruntled that their healthcare coverage never seems to cover any medical care (more typical for high deductible plans) it stands to reason that employees will become unhappy with their coverage, one of the most valued employee benefits.
Your small business is growing and your health plan needs have changed with that growth. This one is self-explanatory. As the size of your company and the corresponding number of employees increases, you should sit down to confirm that the healthcare plans that once worked best for your business and its workers are still the best coverage option.
You have discovered a better plan option. We often hear rave reviews when small business owners switch from their plan provider to a plan with Direct Primary Care, such as Decent’s. We believe this is the best model for healthcare coverage, as it benefits both the doctor and the insured, not to mention, it often includes savings for the employer and the employee. Thus, whether it’s the health insurance plan healthcare model, benefits, or affordability when you find something better for your company, you should go ahead and take the leap.
You are switching to a PEO (professional employer organization) and services include employee health insurance. At some point, you may decide to partner with a PEO to also help you with other parts of your employee benefits, payroll and HR needs. PEOs take this back-office work off of your plate so you can focus on nurturing your business. Most PEOs also offer health insurance plans under their umbrella of provided services, meaning it’s a perfect time to switch plans (and the PEO will usually handhold you along the way).
How can small business owners change their health insurance plans?
Do your research. While you may have an inkling of the new direction you want to take your company health insurance plans, it is always to your advantage to explore multiple options, speak with other small business owners or a health insurance broker and ask the important questions to make sure you are choosing the right health insurance plan to switch to.
Inform your employees of the impending switch. Of course, it’s up to you when and how much you want to tell your employees about switching health plans. Be prepared, such a switch may cause some anxiety and concerns especially if they aren’t forewarned. Offer a sufficient open enrollment period, and let your employees ask questions. Your staff will want to know about the health plan network, if their deductibles will roll over, are dependents included, what the employee premiums will be, and several other practical matters. Prepare an announcement stressing why this change is a better option for the company and for them in the big picture, and prepare a list of FAQs in advance to help allay their fears.
Establish and share enrollment processes and dates. Make sure it’s clear to your employees how to choose their health insurance coverage and provide them with a contact person to reach out to for questions. This should be a trusted expert with excellent knowledge of the new plan, such as your HR representative, PEO account manager, or plan provider contact. You may want to hold a meeting or Town Hall about the change or find another opportunity for employees to ask questions. Notify your employees several times leading up to the official switch and the cutoff date to enroll in the new plans. It’s important to support everyone in making the transition smoothly and on time.
Establish a new coverage start date with the new group plan provider. Of course, it only makes sense to ensure you have no lapse in coverage dates for your employees when you switch to the new plan. Verify your company’s last contracted day with the current provider, and make sure the new plan starts the following day.
Inform the current health insurance plan provider that you are leaving. Let your plan provider account manager know what your last day of service will be with them, and make sure to save all related contracts and paperwork regarding the change.
Does a small business even need to offer employee health insurance?
Under the affordable care act (ACA), employers with under 50 full-time equivalent employees (FTEs) are not required to offer health care coverage, but the advantages (better employee retention and recruitment, healthier workforce) often outweigh the costs. Check out this article to learn more about the advantages: Study Shows Big ROI on Employer-Sponsored Health Insurance. The Small Business Health Options Program (SHOP), part of the ACA, was set up to help businesses with under 50 FTEs find a health plan. Companies with fewer than 25 employees, may even qualify for a small business health care tax credit if buying SHOP insurance. Not sure if it’s a good fit? Contact a local broker who specializes in small group health insurance for guidance. Note: There are private plans not listed in the SHOP program that you may want to consider. Again, a health insurance broker who specializes in small businesses can help understand your needs and guide you to what may be the best fit.
Don’t be afraid to switch.
Changing insurance providers does not have to be a headache. It’s often easier when you work with a broker who can help to inform your decision maker. Or in the case of switching to a PEO, work directly with your account rep, who can inform you of your plan options and make sure you dot the i’s and cross the t’s when transitioning to the new plan.
Have more questions about small business health insurance options? Contact Decent at firstname.lastname@example.org.