So let’s break this down piece by piece and you’ll quickly see the difference between small group and individual health coverage.
Network Access: In Houston, there are only four health insurance carriers currently offering plans to individuals and families (non-group plans) and all four offerings are HMOs. The bummer of it is that none of the four will give you access to either Texas Children’s or MD Anderson. A small or large group policy will normally be linked to a PPO network, although you can choose an HMO if you like which would be less expensive. Most highly regarded physicians and hospitals will be in the PPO networks, but not necessarily the HMOs.
Tax deductible: If you have a family, an individual policy will only be tax deductible for the person who is self-employed, not the entire family. Better some than none. If you are a small business owner and institute a small group policy for you, your family and if you have any, your employees, the entire premium that the company is required to pay is 100% tax deductible. Most companies end up contributing 50% of the cost of each employees’ premium, but they can increase that if it makes financial sense.
Premium differences: A small group HMO plan, per person, will generally be about 20-30% less than a comparable individual HMO policy. A small group PPO policy will generally be about the same price as the comparable HMO option in the individual market; maybe a few bucks more, but nothing to quibble over.
Open enrollment: A small group policy can be placed in force any time the business owner desires. An individual health plan can only be purchased during open enrollment or with a special enrollment provision (SEP). This one is huge. If you need or want to form a small group, you can do that whenever the wind blows. The open enrollment season for an individual or family health insurance policy only lasts 45 days from November 1st-December 15th for plan year 2018.
Ease of Use: Most individual HMO plans require you to obtain a referral from your primary care physician in order to see a Specialist. That’s a bit of a hassle especially if your arm is bending in a way that isn’t natural. With a large group PPO health insurance plan, you can see anyone in your PPO network anytime you like, without a referral.
If you ask me, which you did, then I would say that if you can form a small group policy for your Texas small business, you should do it now. One more time…do it now. There is virtually no downside as your Wife will be happier without her crappy HMO plan, your employees will be happier now that you decided to actually offer them health coverage after all these years and your kids will thank you for making the world a better place.