Business 101: Understanding Health Insurance For Corporations

Business 101: Understanding Health Insurance For Corporations


As many people say, health is wealth. Have you ever wondered why companies offer a comprehensive health insurance package as part of the compensation? And why are millions being invested into said insurance packages? Simply put, there is something in insurance that benefits the workforce and the company. 

This article will cover a brief overview of health insurance for businesses, how it works, and how it impacts your company. Read more below and see how it can be a significant step towards taking care of your employees. 

Health Insurance: General Overview

One of the common things you might have heard when talking about insurance is commercial health insurance. Before we set out to answer what is commercial health insurance, allow us to give a brief explanation of the term “health insurance.”

By definition, health insurance is a distinct contract between an insurance company and clients. For this example, the clients are your business, specifically your employees. That said, these contracts contain specific policies that the insurance company agrees to cover in exchange for regular payments from the client.

These contracts are usually yearly agreements. However, it usually has unique parameters depending on the insurance program and business needs. Once health insurance is active, it usually covers the costs of hospitalization, specific dental procedures, and other perks. This allows businesses and employees to effectively reduce their medical bills significantly. 

The Commercial Health Insurance

Commercial health insurances are primarily policies sold by public and private health companies. In a general sense, these are policies being sold from licensed agents to individuals and companies. These programs may differ from government-backed insurance policies. 

Understand that “commercial” means something from a company, not the government. While its policies are similar to the local government, they are solely based on who the provider of such policies is. Again, commercial health insurance is for all insurance companies except the government. 

Different Kinds of Health Insurance

No one insurance is the same as the other, and businesses will need specific health insurance based on the nature of their work. To keep it simple, here are some of the common health insurance coverages available from different providers. 

  • Health Maintenance Organization (HMO)

HMOs are standard insurance plans for most employees in the business. This coverage relies on primary care doctors and their network of referrals for certain medical services. HMOs act as a network for employees to connect with a professional based on their needs. 

  • Exclusive Provider Organizations (EPO)

These policies allow clients to see doctors without undergoing referral processes, and they finance some out-of-network care in case of an emergency. Unlike HMO, which relies on an established network of referrals to address medical cases, EPO’s covers the majority of costs for out-of-network care. Out of Network (OON) care refers to taking services outside of your provider’s network of referrals.  

  • Preferred Provider Organizations (PPO)

This works when your employees or the business already have a network of professionals. While these plans offer the most flexibility, they usually have higher premiums.

The Cost of Health Insurance

Business health insurance has different costs depending on the program they require. While there is no set estimate of how much these policies cost over time, try to compare different plans based on the following metrics: 

  1. Premiums: These pertain to regular fees or payments to keep your insurance active. Usually, they come in monthly or quarterly intervals.
  2. Copayments: Separate payments for employees to pay for medical services. 
  3. Deductible: The amount employees/businesses must pay for the insurance to take effect. This is a separate fee from the recurring premiums. 

These costs vary from one provider to another and what health insurance plan is purchased. The idea is to create a comparison to find the most affordable coverage with the best coverage.

How To Find The Right Insurance

It can be tricky for employers to find the most suitable package in the business. This is because the policy’s effectiveness is based on company size, workforce numbers, and the nature of work. Here’s what you can do to understand the type of insurance you need.

First, send a company-wide survey on the employees’ habits and existing injury or health-complaint data. The second is to speak with different providers, comparing plans not just on cost but on the quality of services. Avoid being tempted to purchase low-cost coverages as they are generally unreliable. 


A good health insurance plan protects employees against expensive hospital fees and services whenever they plan to maintain their health. And while accidents happen in the workplace, our health insurance protects us financially

As for your business, it can be reflected in how you’re supporting employees, which increases morale and loyalty. So, despite being a daunting task, take the due process of learning more about insurance and get your business protected today.

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