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What is a Small Business Health Plan?

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A small business health plan is that employer�s offer of group health insurance to its employees. At the least, the small business will contract with a particular health insurance provider to offer group rates to its employees. At the most, the small business will pay some or all of the health insurance premiums for employees. Health coverage is a common and substantial benefit provided by both large and small companies, but small business health plans offer their own specific challenges.

Over the past two decades, health care has become an increasingly major issue as, according to some studies, more than forty million Americans have no health insurance at all. According to industry analysts, approximately half of all American small businesses offer health care to employees, so it appears that a large percentage of Americans without health insurance are employed by small businesses that, for whatever reason, do not offer health insurance to employees.

Small businesses are in a difficult situation when it comes to health care. According to the Kaiser Family Foundation, businesses with less than two hundred employees suffered from 15.5% premium increases in the year 2003 alone. At this rate, companies that completely cover employee premiums double their spending every six and a half years.

In recent years, the government has attempted to help small businesses with the passage of a number of health care reforms. In 1996, Congress passed the Health Insurance Portability and Accountability Act, which prohibits health insurance companies from offering insurance to only a select few small businesses in a particular market and set limits on how long an insurance policy can exclude coverage based on pre-existing conditions.

Next Page: How should I decide whether my Small Business needs a Health Plan?

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