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5 Ways to Reduce Small Business Health Insurance Costs

Market analysts believe that health insurance costs, which are already high, will continue to rise by at least 20 percent annually for the next few years. The situation is indeed dismal. The alarm bells have started ringing and it is time the small businesses thought of ways and means of reducing health insurance costs. Spend time to examine various health care plans, compare the plan benefits, insurance-company records, and service guarantees.

Health insurance is a huge business, so shopping around for different insurance companies could reduce your small business health insurance costs. Start by searching the Internet and also ask other owners of small businesses what they pay for employer health insurance schemes. The best method would be to consult a professional insurance agent and study all available cheaper options that do not seriously affect the employees' interests. Here are five practical ways to reduce small business health insurance costs:

1. Explore the possibilities of cost sharing by employees. It is invariably the small companies that tend to cover their workers' total health-care plans. One argument in favor of this suggestion of asking employees to share the insurance burden costs will discourage them from unnecessary use of health services.

2. An effective method to reduce small business insurance costs will be to allow employees to pay for health premiums with tax-free dollars. This can be achieved by setting up a flexible spending account for employees to pay their share of health-insurance premiums as also the un-reimbursed health-care expenses with pretax dollars. A flexible spending account could mean considerable tax savings to employees, because state and federal income taxes and Social Security taxes are not levied.

3. It is common knowledge that insurance premiums skyrocket whenever someone in a small-group plan becomes seriously ill with terminable diseases like cancer or chronic heart ailments. It is worthwhile to explore the possibility of moving employees with serious health problems into a state high-risk pool leading to a more affordable premium for the otherwise healthy members of your group.

4. Switching over to an open-enrollment Anthem Blue Cross Blue Shield is a useful tip worthy of consideration. It is a fact that Anthem Blue Cross and Blue Shield plans operate as high-risk pools by providing open enrollment schemes under which any group can buy insurance. Among the 74 Blue Cross and Blue Shield organizations nationwide, 21 offer open enrollment.

5. Replacing the standard health plan with a HMO can be seriously pursued.It is known to many that unlike traditional health insurance, HMOs cover all medical needs, including routine preventive care, for a fixed monthly payment that is less expensive than most standard health insurance plans.

Employer health insurance is often a major expenditure for small businesses. With premiums soaring, many small business owners are complaining that the insurance costs are proving to be too high and eating into their profits. According to the U.S. Chamber of Commerce, more than 45 million Americans still remain uninsured and approximately 60 percent of them are employees of small businesses. This situation also has to change. Small business health insurance may consume a huge chunk of their income, but availability of employer insurance schemes often attract better qualified employees and also helps to retain talented existing workers.