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What Are Self-Funded Health Plans?

A self-funded health plan is a type of employer-sponsored health insurance that stands as an alternative to traditional, fully-insured coverage. Unlike traditional coverage, with self-funded plans the employer assumes all of the financial risk of providing health benefits, as opposed to paying premiums to an insurance carrier.

With self-funded plans, employers pay for their employees’ medical claims directly using funds that are set aside. Self-funded plans are generally a good option for businesses with healthy employees, who don’t require lots of medical attention. If the overall number of employee claims are low during a year, these plans present the opportunity to save money in the long run.

How Do Self-Funded Health Plans Work?

Self-funded health plans are unique in the sense that employers directly pay for the cost of employee medical claims, instead of paying premiums to an insurance company. While the way these plans work is pretty straightforward, it’s important to have a full understanding of the set-up and administrative processes. In general, here’s how self-funded plans operate:

Employers Set Aside Funds: Employers determine how much money to allocate for expected healthcare costs of employees. Third-Party Administrators (TPA) are often utilized during this process to help employers determine costs, limits and other benefits details.
Plan Management: Employers also generally hire Third-Party Administrators to handle the plan management aspect. This includes claims processing, provider networks and compliance with legal regulations.
Employees Receive Healthcare Benefits: Just like traditional group health insurance, employees will gain access to either a single plan, or can choose from multiple plans. This is ultimately up to the employer. With an insurance plan in place, employees can then visit healthcare providers, and submit their claims to the TPA for processing.
Employer Pays for Claims as They Come Up: As previously mentioned, employers pay for the cost of employee claims as they arise, instead of paying monthly premiums. This presents the opportunity to save money, if employees don’t have a high number of claims.
Stop-Loss Insurance: Most employers with self-funded health plans also purchase stop-loss insurance. Stop-loss insurance protects employers if employee claims are higher than expected. In other words, if claim amounts exceed a certain threshold, stop-loss insurance kicks in by reimbursing the employer for the extra amount.

How Much Do Self-Funded Health Plans Cost for Small Businesses?

Factors Affecting the Cost

The cost of self-funded health insurance plans for small businesses varies depending on a variety of factors. These factors include:

Number of Employees: Healthcare costs are generally more predictable with larger groups. Smaller companies can face increased prices due to the uncertainty regarding unexpectedly high claims.
Location: Different states have different regulations and risk factors, all of which affect the overall cost of insurance.
Employee Demographics and Health: Younger, healthier employees generally cost less to insure. Additionally, factors like gender can play a role in determining the overall cost of a self-funded group health plan.
Stop-Loss Insurance: Employers who purchase a stop-loss insurance plan will pay more in overall costs, but will have more protection if claims are higher than expected. In general, the higher the coverage limit, the higher the premium.
Plan Design: Plans that offer more benefits to employees and have higher coverage limits, will cost more.
Administrative Costs: Hiring a third-party administrator will cost employers extra money as opposed to handling administrative duties alone.
Employee Contributions: Some employers require employees to share some of the cost of self-funded plans, making it cheaper overall for the business owner.

Average Costs

Administrative Costs: Usually range from $50-$100 per employee per month. This includes costs associated with TPAs, compliance and stop-loss insurance.
Medical Claims Cost: While this varies for every business, many small business owners allocate between $5,000-$10,000 per employee per year for medical claims.

Self-Funded Health Plans Advantages

Self-funded health insurance gives businesses a lot of benefits, such as more freedom in designing plans, the ability to make benefits fit the needs of each employee, and possible cost savings.

Cost Savings

One of the best things about self-funded health plans is the chance to save some money. By taking on the financial risk or providing health insurance, you have more say over how the money is spent. This lets you discuss healthcare costs directly and cuts out the profit margin that insurance companies usually add.

With a self-funded plan, you only pay for claims when they happen. Instead of paying annual or monthly premiums for claims that may or may not be made, you only pay for claims when they happen. In short, you don’t have to pay for things you don’t use.

Also, with fully-funded plans, a big chunk of the money you pay goes to the insurance company to run the plan. In a self-funded plan, you can pay a Third Party Administrator (TPA) much less to handle the plan’s administration. On average, self-funded plans cost employers 10%-25% less than fully-insured plans, especially if claims are lower than expected.

Claims Transparency

With self-funded plans, you have direct access to information about claims. This level of openness lets you look at how people use healthcare, figure out what drives costs, and take steps like care navigation tools to save money. With access to detailed claims information, you can make smart choices and make sure that your health benefits program works as well as it can.

Benefit Options

With self-funded health insurance, you can make a benefits package that fits the needs of your business and your workers. This gives you the freedom to adjust coverage choices, wellness programs, and other benefits to fit your company’s culture and the health needs of your employees.

Data Access

When you pay for your own health insurance, you have direct access to plan data, such as claims information, demographics, and trends of use. This information gives you the power to make choices based on facts, find places to improve, and use targeted interventions to improve the health and well-being of your employees as a whole.

Flexibility

Fully-funded plans give you less freedom than self-funded plans. With self-funded plans, you have the freedom to change your benefits package, choose specific coverage choices, and make programs fit the needs of your employees.

You will also be able to change your health plan whenever you need to. For instance, you can add or remove participants at any time, as well as move people to or away from particular providers. This gives you the freedom to create a rewards program that works for your employees and helps their health and well-being as a whole.

Self-Funded Health Plans Disadvantages

Self-funded plans can be appealing, but it’s important to remember that they come with risks and may not be the best choice for every business.

Cost Uncertainty

Self-funded plans don’t have set costs like fully-funded plans do, which have yearly or monthly premiums that can’t be changed. Costs will depend on how many claims your employees make and how much care they need. This makes it hard to plan and budget for healthcare from year to year because you never know what will happen.

In the planning phase of a self-funded plan, budgeting becomes very important. This will rely on things like the age, location, and number of dependents of the employees. The most important factor is estimating how many claims you might get.

When thinking about self-funded health insurance, it’s important to look at your employees’ numbers and health risks. Self-funding may cost more if your workers have higher health risks or have had expensive medical treatments in the past. Doing a full analysis of the health of your employees can help you decide if self-funding is a good idea.

Overage Risks

You have to pay for all eligible claims, no matter how much they cost. Unexpected claims with high costs can affect your cash flow and put a strain on your funds. As was said above, there can be a lot of uncertainty with these types of plans, so it’s important to have enough reserves and risk-mitigation methods like stop-loss insurance in place to deal with possible financial risks.

Administration

Self-funded health insurance plans require more secretarial work than fully-funded plans. You will be in charge of claims handling, managing provider contracts, making sure that rules are followed, and making sure that reports are correct. This routine work can be hard, especially for small businesses that don’t have a lot of staff or money.

It’s important to think about how well you can handle these duties. One way for businesses to save time and money is to hire a Third Party Administrator, or TPA, to handle these kinds of administrative chores.

How To Manage Self-Funded Health Plan Risks

Self-funding health insurance can be dangerous for some businesses. However, there are a number of ways to deal with the risks that come with self-funded plans.

Stop-Loss Insurance

Stop-loss insurance is a very important tool for self-funded health insurance to use to control risks. It protects you from huge claims by giving you money back for claims that are more than a certain amount. Stop-loss insurance lets you limit your financial risk and protect your business from claims that cost a lot of money.

Mitigate Risks

Risk mitigation techniques can help keep costs down and deal with possible risks. Some of these strategies are healthcare navigation services to help people find high-value care, utilization review programs to track how much health care is used and find ways to save money, and disease management programs to help workers with long-term conditions.

Regulation Compliance

The Employee Retirement Income Security Act (ERISA) has rules about health insurance plans that pay for themselves. It’s important to make sure that ERISA standards are met. Such as giving participants plan documents, summary plan descriptions, and yearly reports. Some parts of the Affordable Care Act (ACA) also apply to self-funded health insurance plans.

For example, they must cover basic health benefits, provide free preventive care services, and meet annual reporting requirements. Self-funded health insurance plans must follow not only federal rules, but also state rules and reporting standards. To avoid fines or legal problems, it’s important to know the laws that apply to your state and make sure you follow them.

FAQs

How do self-funded health plans differ from fully insured plans?

With self-funded health plans, employers pay for their employees medical claims directly as they occur. This provides the chance to lower costs if employee claims remain low, but it also means the business assumes all of the financial risk. On the other hand, with fully insured plans, employers pay a set premium to an insurance carrier each month, who takes on the financial risk and pays claims.

Are self-funded health plans a good option for small businesses?

Yes, self-funded plans are generally a good option for small businesses who want to gain more control over their healthcare expenses. The most cost-savings opportunities come to businesses with healthy employees who don’t have a lot of medical claims. Additionally, level-funded health plans serve as hybrid options between self-funded and fully-insured plans.

What if the medical claims of employees are higher than expected?

Most adopters of self-funded plans also purchase stop-loss insurance, to protect against unexpectedly high claims. If employee claims exceed expectations, stop-loss insurance will cover the additional coverage, so the business doesn’t get financially overwhelmed.

Get Small Business Health Plans with EZ.Insure!

If you’re looking to explore health insurance options for your small business, EZ.Insure is here to help! Our user-friendly platform offers free, no-obligation quotes, side-by-side plan comparisons and 24/7 access to licensed insurance professionals. No matter your budget and preferences, EZ.Insure can find a plan for you!

To get started simply enter your ZIP code in the box below, or give us a call at (844)-770-0064.

What is a Level-Funded Health Plan?

A level-funded health plan is one type of employer-sponsored health insurance that offers business owners more flexibility and savings potential compared to traditional, fully-insured health plans. Level-funded plans are created by combining aspects of self-funded and fully-insured health insurance, helping small businesses manage high healthcare costs, while also providing employees with quality benefits.

Unlike traditional, fully-insurance health plans, with level-funded plans business owners incur some of the financial risks for claims. On the flip side, level-funded plans also present the opportunity for refunds, if claims are lower than expected.

How Do Level-Funded Health Plans Work?

Monthly Payments

Business owners with level-funded plans pay a fixed monthly premium that covers:

Their employee’s health insurance claims.
Administrative costs (for things like claims handling and plan management).
Stop-loss insurance (protection limiting owner liability, by covering the costs of excessive claims that go over the predetermined limit).

Claims Processing

Another great feature of level-funded plans is that business owners don’t have to deal with lengthy, complex claim processes. Instead, the insurance provider or third-party administrator does all the heavy lifting, handling the claims and paying the healthcare provider.

End-of-Year Settlement

At the end of the year, if employee claims are lower than expected, business owners may receive a refund or credit. On the other hand, if claims are higher than expected, stop-loss insurance takes action by covering the additional costs. It’s important to note that if claim amounts exceed the stop-loss coverage limit, business owners have to pay the extra cost out of pocket.

How Do I Set Up a Level-Funded Health Plan?

Setting up a level-funded health insurance is pretty similar to setting up fully-insured plan, but has some minor differences:

Assess Your Business Needs: Like any insurance process, before selecting a provider you’ll want to assess your business and employee’s needs. This includes factors such as employee risk factors, budget, number of employees, demographics and expected use of the plan.
Select an Insurance Provider: Select an insurance provider or work with a broker like EZ.Insure, to select a level-funded plan that fulfills your team’s needs and preferences. Once you’ve selected a provider, they’ll calculate your fixed monthly payment amount. During this process, the provider or broker will also set up your stop-loss insurance.
Customize Plan Options: Just like a traditional fully-insured group health plan, you can choose to offer your employees just one plan or multiple options. This includes your standard plan types such as PPOs, HMOs, HDHPs, EPOs and more.
Employee Enrollment: After choosing your plan offerings, it’s important to educate your team on the available options, and help them through the enrollment process. For extra help, talk to your insurance agent or provider about holding a brief webinar to walk employees through the steps.
Track and Adjust: Keep an eye on healthcare costs, plan usage, and claims made. This information will help you determine whether you need to make any adjustments at the end of the year or not.

To find a level-funded plan that fits your business’s budget and needs, work with EZ.Insure! Our platform offers side-by-side plan comparisons, and personal assistance from licensed insurance agents, so you can be sure to choose a plan that checks all the boxes. To get started, just enter your ZIP code below or call 844-770-0064.

How Much Do Level-Funded Plans Cost for Small Businesses?

Level-funded health plans vary quite a bit in price, therefore it is difficult to provide an accurate estimate. With that being said, they tend to be more affordable than fully insured plans, especially if your business doesn’t have a high number of employee claims.

Factors Influencing the Cost of Level-Funded Plans

Business Size and Demographics: The fewer employees you have, the less you’ll likely have to pay per month. Additionally, companies with younger, healthier employees may benefit from cheaper costs.
Type and Number of Plans Offered: Monthly costs may also be affected by the type of plan you choose such PPOs, HMOs or HDHPs. Also, cost may increase if you opt to offer multiple plan options.
Geographic Location: Healthcare costs vary depending on where in the country your business is located.
Claims History: Insurers generally evaluate the claims history associated with a company and its employees. A high number of expensive past claims may increase the overall price.
Stop-Loss Insurance Amount: Since stop-loss insurance is a large contributing factor to level-funded plans, a higher limit usually costs more.

Why Are Level-Funded Plans a Great Option for Small Businesses?

Predictability and Control: Monthly payments are fixed, so there are no surprises.
Healthy Groups Lower Costs: Businesses have the opportunity to save money through end-of-year refunds, if there are less employee claims than expected.
Customization: Just like a traditional health plan, employers can choose from a variety of plan types, benefit structures, coverage levels and networks.
No State Taxes on Premiums: In many states, level-funded plans are exempt from premium taxes, helping to lower overall business costs.
Stop-Loss Insurance: Even if employee claims are higher than expected, stop-loss insurance will pay most, if not all of the extra expenses.

FAQs

What happens if employee claims are higher than anticipated?

If employee claims go over the allocated claims fund, stop-loss insurance works by covering the extra costs. The only time you’ll have to cover extra claims costs out of pocket is if the amount exceeds the stop-loss coverage limit.

What’s the difference between level-funded and self-funded health plans?

Level-funded health insurance plans offer fixed monthly payments, while self-funded plans have fluctuating costs based on the actual claims. Additionally, while level-funded plans provide stop-loss insurance to cover the risk of high claims, with self-funded plans, business owners fund large claims themselves.

Lastly, with level-funded plans, third-party administrators generally handle claims processing, while self-funded plans require more direct employer involvement. All in all, businesses take on much more risk with self-funded plans as opposed to level-funded plans, where the risk is shared between owners and providers.

What’s the difference between level-funded and fully insured health plans?

The main difference is that level-funded plans include stop-loss insurance and provide businesses with the chance to save money in the form of refunds if claims are lower than expected. On the other hand, businesses with fully insured plans pay a fixed premium to insurance carriers who assume all of the risk.

This means there is no chance of refunds, but also no chance of having to pay extra money at the end of the year if claims are higher than expected.

What is the difference between graded funded and level funded?

While level-funded plans have fixed monthly payments covering claims and other fees, graded funded plans start with a lower premium and gradually increase over time. Both plan types offer potential cost savings in comparison to fully insured plans.

How much can business save with a level-funded plan?

On average, businesses save anywhere from 5-30% on costs compared to fully insured plans. Businesses with healthy employees, and a low number of healthcare claims save the most with level-funded plans.

Can small businesses qualify for level-funded health plans?

Yes, businesses with as little as 2 employees qualify for level-funded health insurance.

Get a Level-Funded Plan Today with EZ.Insure!

Level-funded plans stand as an excellent alternative to traditional fully insured health insurance plans. Especially for businesses expecting a low number of claims, who want more control and the opportunity to save money, level-funded plans are the perfect choice. Don’t wait any longer, to give your employees the protection they deserve, instead get started with EZ.Insure today!

Our platform offers 24/7 expert assistance, free customized quotes, and our side-by-side plan comparison tool, so you can be sure to get the coverage of your dreams! To get started, just enter your ZIP code below, or give us a call at 844-770-0064.

What Is an ICHRA?

An Individual Coverage Health Reimbursement Arrangement, commonly referred to as an ICHRA, is a benefit funded by employers that reimburses employees for health insurance premiums and qualified medical expenses. Unlike traditional health plans, where employees are limited to one or a few pre-selected coverage options, ICHRAs let workers choose the plan of their choice, and then receive tax-free reimbursements for the plan’s cost.

While Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) exist only for businesses with less than 50 employees, ICHRAs can be offered to businesses of any size. All in all, ICHRAs serve as a great alternative to traditional group health insurance, as they provide more flexibility to employees, while helping employers manage costs efficiently.

How Does an ICHRA Work?

Employers Decide on a Monthly Allowance: Business owners have the flexibility to decide how much or how little they wish to reimburse employees each month. This reimbursement amount can go towards the costs of employee premiums and other qualified medical expenses. It’s important to note that ICHRAs don’t have any IRS-imposed contribution limits, like QSEHRAs do.
Employees Purchase Health Plans of Their Choosing: Employees have the ability to select just about any health plan they want. This includes plans through the Marketplace, private insurers, or Medicare (if applicable).
Employees Submit Health Expenses: Employees provide proof of their premium cost as well as other eligible medical expenses as they come up. They will be submitted to either their employer directly or to a plan administrator.
Employees are Reimbursed Tax-Free: After submitted expenses are approved, employers reimburse employees tax-free. Additionally, the reimbursements are tax-deductible for employers.

Who Qualifies for an ICHRA?

Employer Eligibility

Unlike QSEHRAs that operate only for businesses with less than 50 full-time equivalent employees, businesses of any size can offer an ICHRA. This includes large corporations, small businesses, non-profits, start-ups and more!

Employee Eligibility

In order to participate in an ICHRA, employees need to be enrolled in an individual health plan that provides minimum essential coverage (MEC). Additionally, they must provide their employer with proof of this insurance plan in order to receive the proper reimbursements.

Plan Structure

Additionally, employers can structure ICHRAs differently for different groups of employees. For example, full-time vs. part-time employees, or salaried vs. hourly employees could have varying setups and restrictions.

How Much Can Employers Contribute to an ICHRA?

While QSEHRAs have maximum employer contribution limits set each year by the IRS, ICHRAs have no limit. In other words, employers have total control of how little or how much they wish to reimburse employees. Additionally, separate reimbursement rates can be assigned to different classes of employees, as long as everyone within the same class is treated the same.

What Medical Expenses Can an ICHRA Cover?

In addition to providing reimbursement payments for employer premium costs, ICHRAs can also provide monetary relief for a number of qualified medical expenses. These expenses include:

Prescription drugs
Over-the-counter medications
Preventative care
Doctors visits/copay
Hospital bills
Routine dental care
Routine eye care (exams, prescription lenses, and contacts)
Certain medical supplies or at-home equipment
Mental health services
Physical therapy
Chiropractic care

While the list of expenses that are eligible to be reimbursed by an ICHRA, they do not cover the following:

Group health insurance plans sponsored by a spouses employer
Medical expenses that aren’t IRS-qualified

What Are the Benefits of Offering an ICHRA?

Employers and Employee Tax Advantages: Not only are reimbursements tax-free for employees, but they are also tax-deductible for business owners.

Cost Flexibility for Employers: Employers have the freedom to contribute as little or as much in reimbursements as they want. Additionally, this amount can be adjusted on a yearly basis.

Plan Flexibility for Employees: Employees have the flexibility to choose a plan that meets their specific needs and preferences, as opposed to being limited to an employer-selected plan.

Administrative Ease: Unlike traditional group health plans that have varying rates that are negotiated every year and annual renewals, ICHRAs are straightforward with very little administrative work.

ICHRA vs. Traditional Group Health Insurance

Characteristic	ICHRA	Traditional Group Health Plan
Business Size	Any Size (1+ employee)	Any Size (1+ employee)
Employer Contribution	The employer sets a monthly reimbursement amount of their choosing.	Employers pay a percentage of employee premiums each month.
Cost Predictability	Employers reimburse employee expenses up to a set amount.	Monthly premium payments are fixed, but can increase year over year.
Plan Choice for Employees	Employees select their own plan, depending on their needs.	Employees must enroll in a pre-selected plan that the employer chooses.
Compliance	Employee health plans must provide minimum essential coverage.	Plans must comply with ACA, COBRA and ERISA standards.

How to Set Up an ICHRA for Your Business

Determine Your Budget and Reimbursement Limits: Decide on the maximum amount of money you want to reimburse your employees each month. If you have multiple classes of employees (ex. full-time vs. part-time) be sure to highlight the differences in the set amounts.
Create a Detailed Plan Document: Put together a document that includes reimbursement details, eligibility requirements and any other coverage details.
Inform Your Employees: Using this document as a point of reference, inform your team about the ICHRA. Be sure to clearly explain how it functions and how they can enroll, as many people are not familiar with this health plan setup.
Review and Adjust Each Year: Be sure to evaluate your ICHRA each year and make changes (if necessary), depending on budgeting preferences and employee feedback.

FAQs

What are the downsides of an ICHRA?

The main downside of ICHRAs is that there is a possibility that employer reimbursement amounts may not cover the entire cost of employee premiums or other medical expenses. In this particular scenario, employees could be faced with unexpected costs that must be paid out-of-pocket. This is especially possible for employees with a lot of healthcare needs.

What’s the difference between ICHRAs and HSAs?

Health Savings Accounts (HSAs) are tax-advantaged savings accounts that employees can use to pay for qualified medical expenses that fall under the health plan’s deductible. Additionally, HSAs are transferable, meaning employees can keep the funds even if they leave for another job. ICHRAs on the other hand, are non-transferable, and reimbursements can be used for premiums in addition to qualified medical expenses.

Can employees opt out of an ICHRA?

Yes— it’s entirely up to the employer whether or not they want to take advantage of the employer ICHRA. With that said, if they don’t opt in, they aren’t eligible to receive reimbursements for medical costs and premiums if they have their own health insurance plan.

Can employers offer both an ICHRA and a traditional group health plan?

In most cases, employers can only offer one or the other, since ICHRAs are contingent on employees purchasing their own non-employer sponsored health plan. The only time that an employer can offer both is if an ICHRA is offered to one class of employees, while another class of employees is covered by a traditional group health plan.

How does an ICHRA differ from a health stipend?
Health stipends are simply extra money allocated to each employee to be used for any medical costs. Additionally, health stipends are considered taxable income. On the other hand, ICHRAs offer tax-free reimbursements to employees and require proof insurance and claims, to ensure that funds are actually being used for qualified healthcare expenses.

Get Started with an ICHRA Today!

ICHRAs are a great choice for businesses of all sizes looking to provide flexibility to employees, without the complexity that often comes with traditional group health insurance. With so many health options available, you don’t need to settle for a plan that exceeds your budget or requires employees to obtain coverage that doesn’t fit their needs. Instead, consider an ICHRA!

Ready to get an ICHRA for your business? EZ.Insure makes the process quick and easy. Our platform offers access to free quotes, a plan comparison tool, and live assistance from expert insurance agents, so you’ll be sure to get a plan up and running in no time!

To get started, simply enter your ZIP code below, or call us directly at (844)-770-0064.

A life insurance policy is a valuable benefit for small businesses looking to support their employees and their families. This type of policy is essentially a contract between employers and insurance companies. As a small business owner, you can offer life coverage as part of your overall benefits package. In short, life insurance plans help employees secure financial protection for their loved ones.

How Does Small Business Life Insurance Work?

Employees typically pay a monthly premium, and if they pass away, the insurance company will provide the beneficiaries they have chosen with a death benefit. A death benefit is a one-time payment in exchange for the premium payments that you made during your lifetime. In general, beneficiaries are free to spend the money however they see fit, covering costs like recurring bills, mortgage payments or the cost of education for a child.

In short, life insurance allows small businesses to offer their employees a financial safety net, ensuring that their families will be taken care of. In addition to providing team members with a way to plan for their future, life policies also enhance overall job satisfaction, retention and recruiting efforts.

Types of Small Business Life Insurance

There is a wide variety of policies to choose from. No matter your employee’s requirements and preferences, there is a policy out there. When you start looking for a small business life insurance policy, the first decision you’ll have to make will be between the two main types of coverage:

Term life insurance
Permanent life insurance

The best policy for you depends heavily on what you need, including whether you require a short- or long-term policy.

Term Life Insurance

Term life insurance is the most popular type of policy because it tends to be the most affordable. With a term policy, you select a specific length of time that you want coverage, typically 10, 15, 20, 25, or 30 years. With that being said, you can get a policy for as few as 5 years, depending on your needs and what your preferred insurer offers.

Another plus to these policies is that premiums never change during the time frame that you choose. As long as you have paid these premiums, if you pass away during the term of your policy, your beneficiaries will be able to file a claim for the death benefit and receive the money without having to pay taxes on it.

You may be able to renew your policy after the term has ended in one-year increments. This is referred to as guaranteed renewability. However, the price of your renewed policy will increase on an annual basis.

You will have to apply in order to get a term policy; your chosen insurer will determine your risk level before offering you coverage. This is known as “underwriting,” and it typically involves undergoing a medical examination to assess your health, as well as questions about your profession, hobbies, and your health history. Rates may increase if you engage in potentially harmful activities, such as scuba diving. Insurance costs can also go up if you work in a hazardous environment, like on an oil rig. It’s important to note, though, that there are certain term policies that do not require a medical exam, but they may be more expensive, or offer a smaller death benefit.

Permanent Life Insurance

A permanent life insurance policy remains in effect for the entirety of your life, provided that you continue to pay your premiums. This type of policy is generally more expensive than a term life policy because it will never need to be renewed.

There are several types of permanent policies, including:

Whole Life Insurance

Also known as traditional life insurance, this type of policy is guaranteed to remain in place for your life. Whole life insurance not only provides a benefit to beneficiaries upon passing away, but it also includes a savings component. Meaning you will accrue a cash value when you pay your premiums. Interest will also be accrued on a tax-deferred basis at a predetermined rate throughout the term of the investment.

Universal Life Insurance

Universal life insurance policies offer more flexibility when compared with whole life policies. You’ll be able to choose between multiple options for both your premiums and your death benefit. As well be able to change your premium rates throughout the life of the policy as your cash value grows.

These policies, like whole life policies, also have a cash value. Your premium price will include both the cost of insurance (COI), and the accrual of your cash value. The price of this premium will be dependent on your age and risk level.

Indexed Universal Life Insurance

The primary difference between indexed universal life insurance (IUL) and traditional universal life policies is how cash value is accrued. Instead of only being able to grow based on a fixed rate, the cash value with IUL can also grow based on a stock index. Which is a predetermined grouping of various stocks.

IUL provides the same flexibility to change your premium as your cash value grows as universal life does, with the potential to one day have all of your premiums paid for by the cash value you have accumulated. This is known as a “zero-cost policy.”

Variable Universal Life Insurance

The term “variable universal life” (VUL) refers to a specific type of permanent life insurance policy that includes an integrated savings component and makes provisions for the investment of your cash value. The premium is adjustable, just like it is with standard universal life insurance. The cash value can be invested thanks to the investment subaccounts offered by variable universal life insurance. The subaccounts perform a function that is similar to that of a mutual fund. These policies are “variable” since the returns you’ll see with your cash value account will vary based on market fluctuations.

When compared to traditional cash value or whole life policies, VUL insurance will give you greater flexibility and growth potential. But before purchasing this type of policy, you should carefully evaluate the associated risks.

Final Expense

Final expense life insurance, also known as burial, funeral, simplified issue, and modified whole life, is a type of whole life policy that is simple to qualify for. It also provides a modest payout in the event of your passing. This type of policy is an excellent choice for those who are looking for inexpensive whole life policies that have a death benefit ranging from $2,000 to $35,000.

The only big difference between final expense life insurance and other types of permanent life insurance is that this type of policy does not have a cash value. They also have a smaller death benefit as well as lower premiums. The death benefit of final expense insurance is intended to cover expenses for funeral or memorial service and burial/cremation. But with that being said, your beneficiaries will still be free to put the death benefit toward whatever they want.

The Cost

The price of life insurance can vary quite a bit depending on a number of factors. The kind of life insurance policy that you purchase will be one of the most important determinants of its cost. For example, the same amount of coverage for a term life insurance policy will be cheaper than it will be for a whole life insurance policy.

Some other factors that can affect the price of your small business policy include:

Employee Age – Premiums tend to be lower for younger employees since they have a lower risk of passing away in the near future.
Employee Gender – According to the National Center for Health Statistics, the average lifespan of a female is approximately four and a half years longer than that of a male. Because of this, in most cases, men pay a higher premium than women do. This rule is not followed in certain states like Montana where insurers must provide gender-neutral life insurance rates.
Employee Health – Your life insurance premiums will be heavily influenced by the state of your health. While most insurance group life insurance policies don’t require employee medical exams, insurance companies may look at the overall health profile of your workforce.
Industry and Workplace Risks – Companies within industries with higher-risk jobs may be subject to higher group life insurance rates. For example, a construction company with employees who regularly use heavy machinery would be considered a high-risk occupation.

How to Choose Your Coverage Amount

In order to estimate how much life insurance coverage you should offer to your employees, you should:

Think about the financial protection that your employees and their families need. Think about a coverage plan that helps to replace your employee’s lost income, pay off debts, and cover future expenses like education and mortgage payments. A common practice for businesses is to offer employees a fixed coverage amount like $50,000. Other owners will simply multiply their employee’s salary by 1 or 2 to come up with the coverage amount. With all that being said, the larger coverage amount you’re able to offer, the more protection your employees and their loved ones will gain.
Assess your business’s budget. Determine the amount your company can contribute towards employee premiums, and subtract this number from your available fund. While some business owners choose to cover the full cost of their employees’ coverage, others offer life insurance as a voluntary benefit. This simply means that employees can opt in to get the coverage for an additional cost per month.
Consider long-term affordability. The coverage you provide should be affordable for your business, while also offering meaningful financial support to employees’ families. Finding the balance between these two factors is crucial in getting a policy that satisfies your team and is sustainable for you as an owner.

How to Choose the Right Policy

There are so many options when it comes to life insurance that it can feel overwhelming to make the right choice for you. So, the first thing you should do is determine whether you want term or permanent life insurance.

If a policy that offers life coverage for a limited amount of time is more attractive, you should think about purchasing a term life insurance policy. Term life is also an excellent option if your finances are tight, since the premiums are usually significantly less expensive than those for permanent life. Lastly, if your needs change, you can usually convert your term policy into a permanent policy at a later time. You won’t have to reapply for life insurance or undergo a medical exam if you convert your term policy to a permanent plan. This is thanks to the term life conversion option.

A permanent life policy, on the other hand, is a good option if the accumulation of a cash value is a priority for you and your team. With that being said, these policies generally come at a higher cost. Due to this factor, they are less commonly adopted by employers.

All in all, the type of policy you decide on depends on you and your team’s preferences and future goals. With that being said, term life insurance is the more typical addition to employee benefits packages as they offer broad coverage and are lower in cost.

Get Small Business Life Insurance Today!

Everybody has their own unique set of requirements, priorities, and financial constraints. At EZ.Insure, we know that you want the best coverage for yourself, your employees and their families, but we also know that you have to stick to a budget.

Our user-friendly platform offers free, no-obligation quotes, side-by-side plan comparisons and 24/7 access to licensed insurance professionals. Don’t let your team go uninsured any longer. Instead, get a small business life insurance policy and protect their loved one’s futures, today!

To get started, simply enter your ZIP code in the box below, or give us a call at 888-788-4649.

If you wear contacts or glasses, you are aware of the high cost of vision care. For example, the average price for glasses frames and lenses is well over $250, but a vision care plan can help make the cost of vision care more manageable.

Oftentimes health insurance plans offered by employers include a small business vision insurance plan. If you own a small business and you don’t offer vision insurance to your team, you should consider doing so as it’s more affordable than you might think.

How Vision Insurance Works for Small Businesses
What Does Vision Insurance Cover?
Types of Vision Care Insurance Plans for Small Businesses
Why Small Businesses Should Offer Vision Insurancee
Advantages and Disadvantages of Vision Insurance
The Cost
FAQs
Get Small Business Vision Insurance Today!

How Vision Insurance Works for Small Businesses

Medically necessary vision care is often covered by a group health insurance plan. For instance, your insurance typically covers ophthalmologist visits if you have injured your eye or exhibit symptoms of an eye condition. On the other hand, health insurance does not cover routine eye exams or eyesight correction. For this type of care, you will need a separate vision insurance plan. This type of insurance typically pays for vision correction with elective treatments like LASIK, as well as eye exams and corrective lenses.

As with all other types of insurance, you have to maintain vision care insurance by paying a premium to your insurance provider. The cost of small business vision insurance varies depending on your plan, provider, and location. Basic plans are typically relatively reasonable, but as you add coverage, costs increase.

What you get for your premium payments can vary greatly. For example, while some vision care insurance plans cover the whole cost of eye exams, others require a copay. In addition, some plans provide an allowance for corrective lenses every 12 or 24 months, while others only cover a portion of the cost, or offer discounts. To receive the full benefits of your plan, you might need to visit a doctor in your plan’s provider network.

There are also things that aren’t covered by vision care plans. For example, if you want upgrades like designer frames, anti-reflective or anti-scratch coating, or progressive lenses, you will probably have to pay extra money out-of-pocket.

What Does Vision Insurance Cover?

Eye exams, prescription eyewear (contact lenses or glasses), and medically necessary treatments are all covered in some way by vision insurance, helping to reduce your out-of-pocket costs for them. Additionally, many vision plans include discounts or allowances for photochromic lenses, which are eyewear that blocks ultraviolet light and blue light from computers, as well as prescription lenses with scratch- and anti-reflective coatings.

The majority of vision insurance policies include a set of benefits or discounts on eye care and eyeglasses. Even discounts on Lasik and photorefractive keratectomy (PRK) procedures are offered by some vision insurance plans. These treatments fix vision issues linked to:

Nearsightedness (difficulty seeing distance)
Farsightedness (trouble seeing up close)
Astigmatism (when your eye isn’t completely round)

Even though the prices of PRK and Lasik have decreased over the years with the development of newer technology, they can still be expensive to pay for out-of-pocket.

Types of Vision Insurance Plans for Small Businesses

Small businesses can typically choose from two main categories of vision care:

Vision Benefits Plans – These are actual insurance policies. Employees make a premium payment each month, and are in turn covered for routine eye exams, eyeglasses, contact lenses, and other requirements for eye care. Each time you utilize one of these services, you typically have to pay a copay.

Most vision benefits plans are structured as PPOs. That means employees are encouraged to use an eye doctor within the plan’s network, and are responsible for a larger portion of the cost if they receive care out-of-network.

Typically, these plans will cover a certain amount of the cost of vision hardware. For example, your plan might pay $175 for frames, while anything above that amount is your employees responsibility to pay. LASIK eye surgery and other cosmetic procedures are typically not covered by these vision policies, but some do provide discounts for them.

Discount vision plans – The monthly premiums of vision benefits plans are significantly more than the cost of a discount vision plan. This is because discount vision plans do not provide the complete cost coverage provided by a vision benefits plan; instead, they just offer you a discount on vision care, which is often between 15% and 35%. Discount vision plans generally offer discounts on eye exams, lenses, and other products that vision benefits plans normally cover.

Why Small Businesses Should Offer Vision Insurance

Every employer should consider offering vision insurance as part of an overall employee benefits package. Even if your employees’ vision is good right now, as they get older, it could gradually get worse. Not only that, but an eye care professional can identify symptoms of eye disorders or injuries, in addition to determining whether you need a prescription or a prescription update. For instance, your eye doctor can identify the following conditions during an eye exam:

Diabetes
High cholesterol
Glaucoma
Some forms of cancer

Additionally, if you have your employees have kids it’s even more important to offer vision insurance. Did you know that it’s recommended for children to visit an eye doctor at least once per year? The eye doctor can check their vision for any problems or determine whether or not they may need glasses.

Pediatricians advise that babies have three vision screenings in their first year to monitor eyesight and eye growth. Early detection of any potential issues can guarantee that any problems are treated quickly and are monitored as soon as possible.

Advantages and Disadvantages of Vision Insurance

Vision insurance has advantages and disadvantages. Whether you should purchase a more expensive comprehensive policy for your team or not may depend on your employee’s vision needs and underlying conditions. For example, it can be beneficial to spend more money on vision insurance if members of your team have a history of needing eye exams for medical issues. On the other hand, you might not need an expensive eye care insurance plan if your employees simply visit the eye doctor for a basic checkup once a year.

Overall, vision care insurance is affordable and could end up saving you money over time. Particularly if you frequently need corrective lenses or have ongoing eye problems. Also, if you eventually require eye surgery, it may also lower the cost.

Disadvantages of vision insurance include the possibility that it won’t always cover the services you require, or that it won’t let you receive treatment outside of its service area. Additionally, some policies might only carry a select few brands. In other words, if you like using a particular brand of lenses or specialized lenses and frames, you may have to pay out of pocket.

The Cost

The cost of vision insurance will vary depending on the coverage offered by various plans and providers. While some private vision insurance companies merely require you to visit any optometrist or ophthalmologist, others will not pay for your exam if you see a provider who is not in your plan’s network. Pay attention to these details, as well as your copays and deductibles, because choosing a doctor outside of your plan’s network could result in expensive fees.

The majority of basic dental insurance plans cost between $10 to $20 per month per employee. Employers have the option to cover these costs in total or contribute a portion of the total cost. For those looking to save on eye exams, but aren’t able to afford premiums for private insurance, a discount plan would be a good option. These alternatives let you pay a monthly fee that is cheaper than a normal premium in exchange for discounted eye care services.

Another option to pay for vision care would be using funds in your health savings account (HSA). You just have to ensure that vision services you need are considered a qualified medical expense by your HSA.

It’s important to note that if you or your employees don’t have vision insurance coverage, you can still pay for your optometrist visit and prescription glasses out-of-pocket. A new patient eye exam normally costs between $150 and $200. Although costs will vary depending on the physician and area.

To see health insurance costs and information specific to your state click here!

FAQs

Is vision insurance worth it for small businesses?

Yes, offering vision insurance to your employees goes a long way in improving overall well-being and productivity. Additionally, it keeps vision expenses manageable for employees so that they don’t have to worry about high costs when visiting the eye doctor.

Can I get a dental and vision bundle policy for my employees?

Yes, you can get a package of dental and vision insurance. With this package, you can save money on your team’s dental and eye care since combination policies usually come at a discount price. To make sure you get the best deal, you should compare the companies that offer this type of bundle.

Why is vision insurance separate from health insurance?

Vision insurance is often sold as a separate policy from health insurance because it covers specialized care. Also, in the past, craftsmen, not doctors, made and sold glasses. This led to a long-standing difference between health care and eye care.

Get Small Business Vision Insurance Today!

Offering a group health insurance plan to your employees is a great way to take care of their basic medical needs, but it doesn’t cover everything. Adding a supplemental vision insurance plan is a cost-effective way to fill in the gaps, and help employees maintain good eye health. Not to mention the fact that it only costs about $10-$20 per month for each employee.

EZ.Insure makes it simple to get the eye care you deserve. Our user-friendly platform offers free, no-obligation quotes, side-by-side plan comparisons and 24/7 access to expert insurance agents. To get started, simply enter your ZIP code below, or give us a call at (844)-770-0064.

What is QSEHRA?
How Does QSEHRA Work?
Who Qualifies for QSEHRA?
How Much Are Employers Allowed to Contribute to a QSEHRA?
What Medical Expenses Can QSEHRAs Cover?
Benefits of Offering a QSEHRA
QSEHRA vs. Traditional Group Health Insurance
How to Setup a QSEHRA for Your Small Business
FAQs
Get Started with Your QSEHRA Today

What is QSEHRA?

A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a health benefit alternative to traditional health care, tailored to businesses with less than 50 full-time equivalent (FTE) employees. Rather than providing a standard group health insurance plan, companies offering QSEHRA can reimburse employees tax-free for their individual health insurance premiums and other qualified medical expenses.

QSEHRAs stands as a flexible, economical alternative to group health plans, allowing small businesses to offer employees important medical benefits without the complexity of traditional coverage.

How Does QSEHRA Work?

Employers Establish a Monthly Allowance: Small business owners get to decide up to how much money they pay back to their staff each month for premiums and medical expenses. The IRS establishes annual limits each year that the employer reimbursement amount must stay within (for 2025, the IRS annual limit is $6,350 for individuals and $12,800 for families).
Employers Buy Their Own Health Insurance Plans: Whether it’s through a private insurer, the Marketplace or other sources, employees purchase their own health plans based on individual and/or family preferences.
Employees Submit Health Expense Claims to Their Employer: Next, employees submit expense claims to their employer for reimbursement. Expenses include their insurance premiums and other qualified medical costs.
Employers Reimburse Their Employees Tax-Free: Employers reimburse their workforce up to the predetermined monthly amount, after reviewing the submitted expenses. Employees receive their reimbursements tax-free and they are tax-deductible for the employer. Employers generally have a 90 day period to reimburse employees for qualified expenses.

EXAMPLE: An employer sets a monthly QSHERA allowance of $350. If an employee purchases a health plan that costs $250 per month, they would get reimbursed for the entire $250 each month, tax-free. The remaining amount (in this case $100, could be used for other qualified medical expenses).