Small vs Large Business Health Insurance

How does purchasing health insurance differ between large and small business?

There are several key differences between large businesses (usually defined as having 100+ employees) and small businesses providing plans for their employees. One of the major differences is how the businesses purchase the policies for their employees. As stated in the Affordable Care Act, all large employers are required to provide health insurance to their employees. Large employers contract with one of the major health insurance carriers and have them administer the plans for their employees. The carriers in this situation tend to have several important responsibilities including:

Contracting with doctors and hospitals

Processing claims and administering policy provisions

Providing Information for the employees about their policies

The provider of these plans is usually helped picked by executives of the company with the help of consultants that are experts in the field. One other major difference is that these large employers usually have to use one of the major insurers, Cigna, Aetna, UnitedHealthcare, and BlueCross Blue Shield, to provide their policies. While smaller employers can contract with the insurance provider of their choosing, large employers need to turn to one of these four carriers to ensure that they meet the minimum requirement of coverage.

The purchasing of health insurance by small employers (fewer than 100 employees) is different. Instead of contracting with large carriers that administer their policies, small employers tend to purchase their health insurance from brokers that are licensed to sell insurance for the health insurance companies. These brokers are experts of the plans that they sell and can usually find plans that meet the needs of the employees. However, they do have the same number of options that large businesses have.