Todayâ€™s entrepreneur is faced with the reality that offering health insurance is not just a perk but a necessity. There is no way around it. In the pursuit of ACA compliance, many are reaching out to organizations that offer discount health insurance as a way to satisfy legal requirements.
If youâ€™ve heard the phrase, â€śthere is no such a thing as a free lunch,â€ť let me tell you itâ€™s true. In no uncertain terms is any company is out to save you a buck at the expense of their own bottom line. I learned that in my first few weeks of business calculus. So why do discount health insurance companies exist?
3 Things Discount Health Insurance Companies Say That Arenâ€™t True
Have you ever wondered how discount health insurance companies can stay in business when their prices are lower than their better-branded competition? If you have ever asked a discount health insurance sales rep that question there are typically of 3 things that they would say. Hereâ€™s what weâ€™ve heard the most:
We Make It Up In Volume – Every entrepreneur worth his or her salt knows that this business model is pretty much impossible to pull off. The reason is just pure numbers. In order to make something up in volume, youâ€™d have to save a substantially larger sales engine than your competitors. Your lesser-brand insurance providers couldnâ€™t have that going for them on their best day. Donâ€™t believe it when you hear it; numbers donâ€™t lie.
Effort always hits a ceiling. If they are trying to make you believe that their offer is so good that everyone will want it then it would be a fair question to ask why that hasnâ€™t happened for them yet.
We Negotiate The Best Rates And Pass The Savings Onto You – Not only do discount health insurance providers throw that one out there but lots of discount furniture stores and plenty of car lots do too. Do you really believe that a discount outfit is more capable of getting better rates through them than you could get directly? Invariably, when you are getting a discount itâ€™s because what they are offering in the first place isnâ€™t top quality.
If someone were to offer you a brand new Mercedes for the price of a base model Hyundai, you wouldnâ€™t take it. Why? Because you know a car like that wouldnâ€™t go for $20,000 unless something was wrong with it.
We Want Everyone To Be Able To Afford Top Quality Coverage – It sounds so considerate. The idea that a company out there would care so much about everyone having the best coverage at the lowest possible price that they built a business around it…why? Are there really entrepreneurs who lay awake at night thinking about all those poor people working for small businesses that donâ€™t have great health insurance? Thatâ€™s pretty unlikely. Trust me, whatever they are likely peddling isnâ€™t â€śbest-in-class.â€ť You will realize that when you read the coverage options.
What You Really Get With Discount Health InsuranceÂ Companies
Unfortunately, as many small business owners have discovered, discount does not equal great coverage. When you are offering cut rates, something has to give. That is the name of the game. There are a couple ways they try to couch these caveats so letâ€™s bring them out in the open:
Low Monthly Payments Usually Means Big Deductibles – When discount health insurance companies lead with low monthly premiums, the back end is that it is your employee’s making up the difference in large deductibles that the average healthy member would never need to spend in health care to make it worth their while. They end up paying their monthly premium and then paying out of pocket for everything in that calendar year until they meet their deductible.
Most of your employees, even with families, are unlikely to accumulateÂ $5,000 worth of medical bills per year. Factor in the fact that these plans can still run your employees around $500-900 or more per month and that isnâ€™t a savings at all.
Big Brand Names With Skimpy Coverage – If your discount broker is name dropping insurance companies that they know youâ€™d love to offer your employees but at rates you canâ€™t believe, ask to see the fine print. What you get is a shiny, expensive looking logo with almost non-existent coverage. Your employees donâ€™t want to have health insurance that doesnâ€™t cover them when they need it. Donâ€™t bother with a big name unless it has great coverage to go along with it. You donâ€™t get something for nothing here either.
How You Can Have The Best Of Both Worlds With A PEO
One thing to get settled is that a PEO is not a broker for discount health insurance plans. They are so much more than just offering your employees great rates for premium coverage. A PEO is a full-service HR outsourcing solution that is able to offer your employees the coverage they want at a price you need because they co-employ.
A co-employer takes on the burden of head count with you and so their massive numbers of co-employed people qualifies them for the kinds of rates for health insurance that only enterprise level companies could afford.
Along with great coverage, your fees pay for complete payroll outsourcing, tax filing and limited legal coverage as an employer. If youâ€™ve been paying for all of this on top of employee benefits, chances are this is sounding too good to be true. But it isnâ€™t. You can find out all about PEOs and what they offer the small business owner at no obligation to you today by working with a PEO broker like PEO Spectrum. Get more than what you expected from a PEO and stop feeling like discount health insurance companies are eating your lunch.