Providing small business medical insurance for your employees is essential. After all, most employees list medical insurance up there with compensation as one of the top things they look for when seeking a job. But how can you compete with larger companies for the best employees if you can’t provide this highly coveted benefit?

The rising cost of small business medical insurance makes it difficult for some companies to offer. According to the 2006 Kaiser/HRET annual survey, companies with 3 to 199 employees paid 33% more for small business medical insurance than companies with 200 or more workers. And that’s if small businesses offer insurance at all. The survey also showed that more than 50% of companies with 3 to 10 workers don’t provide medical insurance for employees.

Small business medical insurance plans cost so much because there aren’t enough employees to absorb the costs of administering the plan. In many cases, companies will offer higher salaries to compensate for the lack of health coverage, but that’s usually not enough to win over employees.

Lowering your small business medical insurance rates
Fortunately, there are ways to make the costs more palatable and still provide comprehensive small business medical insurance for your employees. Here are some of the steps you can take:

• Explore group plans – Group plans for small business medical insurance allows the "little guy" to get benefits reserved for "big players." By joining up with other small businesses, you can have more employees under a single medical insurance plan which qualifies for lower rates.
• Get in the pool - In addition to group plans, you may be able to get small business medical insurance through insurance pools. These pools are offered to the smallest companies (usually 1 to 10 employees) that are high risk but need insurance.
• Institute a wellness program – This program provides screenings, flu shots, and lifestyle programs to ensure your employees stay healthy. Wellness programs can also help you avoid higher premiums by offering assistance to workers with addictions. Having just 1 to 2 smokers or drinkers on staff, for instance, could make your company an insurance risk that leads to higher premiums.
• Scale back coverage - You can either take away a few benefits, or ask employees to contribute more towards the premium to maintain their coverage.
• Learn what your employees want – If you want to know what kind of small business medical insurance will make employees happy, just ask them. Explain how certain benefits could be more expensive and ask if they’re willing to take on more of the cost.
• Implement a health savings account – HSAs are growing in popularity. While not technically a type of small business health insurance, HSAs allow employees to save pre-taxed earnings in a special account to cover medical expenses.
• Understand your options – HMOs. PPOs. POSs. That’s a lot of acronyms to remember and each of them feature different costs, coverage, and benefits. BuyerZone’s Health Insurance Buyer’s Guide can give you some insight into how each works and which would be the most affordable for your business.
• Don’t accept the first rate – It’s always best to shop around for the best rates before making a decision that will impact everyone at the company. One way to get a good mix of plan features, customer service, and affordable premiums is to submit a free BuyerZone request for small business medical insurance quotes. You’ll get matched to multiple providers who will discuss your options and let choose the appropriate plan.