8 Important Small Business Health Insurance Terms You Should Know

Buying business insurance is necessity for any responsible business owner. It is a way of protecting your investments, cushioning them from the potentially damaging effect of many insurable risks.

All businesses, regardless of size, can also benefit from having insurance that pertains to their employees and their health. As the owner of a small and medium enterprise, it helps to have a grasp of basic small business health insurance terms.

Named insured – refers to any entity—whether person, firm, or organization—that is specifically designated as an insured. Even members of the firm or organization in question can qualify as an insured, although they may be distinguished as ‘unnamed.

small business health insurance

Premium – represents the amount of money that you as the business owner must pay in return for transferring risks to employee health, such as death, injury, loss or damage, in an insurance policy.

Benefit – the amount that the insurance company pays to a plan member to cover medical costs.

Benefit level – refers to the maximum amount of compensation that the employee receives for time not worked, to use toward a covered benefit.

Benefit year – the agreed-upon 12-month period that a health insurance benefit is in effect. Benefit year doesn’t necessarily coincide with the calendar year. Benefits and rates may be updated at the beginning of the benefit year every time the policy is renewed.

Maximum allowable – also known as the ‘allowed amount’ and ‘allowable charge,’ is the dollar amount that the insurance company considers to be a reasonable amount for medical services or supplies based on the average rates in a given location. Thus, the maximum allowable in a rural area may be smaller than that of an urban one due to higher costs of living and other related factors.

Claim – a plan member’s application requesting the insurance company to cover medical expenses. May also be requested by the plan member’s healthcare provider.

Employer’s liability insurance – this type of insurance protects you in case an employee files a lawsuit after getting injured at work. If you provide your employees with workers compensation, you limit their right to sue.

Knowing these small business health insurance terms can help you protect your employees, and with them, your business. If you want to learn more about obtaining health insurance for your employees, consult with a trusted health insurance provider that caters to businesses of any size, such as ESIS, Inc. ESIS offers free consultations and are happy to answer you questions.

Sources:

Glossary, HealthCare.gov

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Shannon

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