7 Tips for Picking the Right Healthcare Plan

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Healthcare is a unique and complex industry, with different players and dynamics than other business sectors. Healthcare insurance companies come in many flavors, from local independent agents to national chains to hybrid models that operate as both an insurer and an operator of healthcare facilities. The dizzying array of options can make it challenging for small business owners to find the right fit, especially given the limited time and resources most entrepreneurs have for researching new vendors.

Research your options

There are many different healthcare insurance options out there, each with their own pros and cons. To get started on your search, ask your employees to complete a health risk assessment that can help you identify which plans might be best for your workers’ needs. You can also check out the health insurance comparison tools available from the government, your state’s insurance department, and independent websites like NerdWallet and Health insurance. Before you sign on the dotted line with any healthcare insurance company, make sure to do your homework and understand the full range of options available to you.

Don’t get locked in

Healthcare insurance contracts are typically long-term agreements, so it’s critical to make sure you remain nimble and open to other options over time. Especially if your business is growing rapidly or experiencing significant turnover, you may find that your current healthcare insurance provider no longer offers an adequate level of coverage. If you find yourself in this situation, don’t get too attached to your current provider: it’s better to switch carriers now than to incur hefty penalties later once you’ve broken your agreement with your current insurer. Don’t get too attached to your current provider.

Know what’s included and what’s not

It’s important to be clear on exactly what’s covered under your particular healthcare insurance plan. For example, drug coverage is a feature that many small businesses owners mistakenly assume comes with all insurance plans. In fact, many insurance providers do not cover prescription drugs at all, let alone at a level that makes a real impact on the bottom line for patients. It’s also important to understand what isn’t covered under your plan—especially deductibles, co-payments, and out-of-network care.

Compare providers by cost, not just features

When you’re comparing healthcare insurance providers, make sure you’re looking at the full cost of coverage for your company, not just the premium or monthly fee. For example, a plan that charges $2,000 per employee per year for a robust set of benefits may be a much better value than a plan that costs $1,500 per employee but covers far fewer services. Unfortunately, it can be difficult to compare apples-to-apples when reviewing different health insurance providers, given the wide range of coverage options available. Many providers also have opaque name-picking systems that can make it difficult to directly compare different plans. For example, some providers will list their plans by letter, while others use a letter-and-number combination.

Ask for references and check consumer reviews

One of the best ways to get a sense of a healthcare insurance company’s quality and track record is to ask for references from other business owners who have contracted with them in the past. If a provider offers references, it’s because they know those customers will be happy to sing their praises. If you can, also take the time to read through reviews left by other customers of the provider you’re interested in, either on the provider’s own website or on review sites like Yelp and the Better Business Bureau. Many healthcare insurance providers also have a presence on online forums like Reddit, where customers can share their experiences.

Watch out for upselling and hidden fees

Healthcare insurance companies, like many other business-to-business vendors, have a reputation for upselling, where they encourage customers to purchase plans or services with higher price tags than they actually need. For example, many insurance providers charge an additional fee for covering employees who are considered “high-risk,” like those who have a chronic or preexisting condition. While these fees are not inherently bad, and may be a necessary part of doing business if you employ workers in high-risk occupations.

It’s important to understand what charges you’re being assessed and why. If you feel like a provider is trying to upsell you products you don’t actually need, you have the right to walk away. Unfortunately, many healthcare insurance companies also tack on hidden fees and charges that can only be discovered after signing on with them. These include things like administrative fees and service charges, as well as stock transfer and other miscellaneous charges. Be sure to review your contract carefully to understand what charges apply to your business.

Check the provider’s financial strength

Health insurance companies are regulated by state government agencies, called “blue sky” boards, which act as an industry watchdogs. These boards are charged with protecting consumers from fraudulent or shoddy businesses that might otherwise operate with impunity in the healthcare insurance space. During your research process, take a moment to visit your state’s blue sky board website to see how the providers you’re considering stack up.

The board’s website will contain information about the company’s financial stability, regulatory history, and complaint or disciplinary actions against the company. In particular, look for information about the company’s capital and surplus, which can give you insight into its financial strength and ability to weather economic downturns or unexpected events. The higher the surplus, the more financially secure the company is likely to be.

Look beyond the sticker price

Healthcare insurance is an expensive proposition, and small business owners need to make sure they’re getting the best value they can. Unfortunately, many owners fall into the trap of comparing plan prices based on the monthly premium alone, rather than the total cost of coverage. When you do the math, you may find that the cheapest option, while certainly the path of least resistance, may not be the most economical in the long run. Depending on the providers you’re considering, you may be able to get a reduced rate by signing on with a provider that meets certain qualifications, such as offering a high-deductible plan or being an association or trade-related provider.