Tell a small business owner, “Hey, it’s time to revisit the health insurance you offer your employees,” and he or she may break out in a cold sweat. The annual process of evaluating insurance options and choosing the one that best fits your company’s needs often is among the most complex and confusing parts of running your own small business.
If you don’t have an HR team to help navigate the process, you may feel especially impeded. Deciphering insurance options, after all, probably is neither your area of expertise nor the reason you started your company. Consequently, almost half of smaller businesses avoid the issue altogether: Only 56% of small employers provide their employees with health insurance, according to the Kaiser Family Foundation’s 2018 Employer Health Benefits Survey.
But that’s not a best-case scenario for either the company or for employees. Workers who have employer-sponsored insurance benefits tend to be healthier than those who don’t, which means fewer days away from work. In today’s tight job market, competitive benefits are powerful retention and recruiting tools because they enhance current employees’ job satisfaction and can tip the scale in your company’s favor among job seekers. And, if you have 50 or more full-time-equivalent employees, the Affordable Care Act requires you to provide small business health insurance.
Here are five tips for finding the small business plan that will provide your employees with the greatest protection for the budget you have available.
1. Look at Group Coverage
Although individual health plans may cover both individual employees and their families, group insurance typically offers more extensive coverage and almost always costs less because it spreads the insurer’s risk across multiple policyholders who are part of the same company. Depending on your budget, you may decide to pay the entire premium or ask employees to cover part of those costs. The Kaiser Family Foundation’s survey found that covered workers in small firms contributed, on average, 16% of the premium for single coverage and 40% of the premium for family coverage.
2. Don’t Miss Out on Tax Credits
If your company meets certain criteria – including having fewer than 25 full-time employees and covering at least 50% of your workers’ premiums, among others – it may qualify for tax credits when you purchase a plan through SHOP, the Affordable Care Act’s Small Business Health Options Program Each state runs its own SHOP marketplace. Even if your company doesn’t qualify, you may still choose to buy health insurance through the ACA’s marketplace, a move that may allow you to deduct premium costs as a business expense.
3. Consider All Related Costs
Premium costs depend, of course, on the breadth of benefits you offer your employees, whether you offer insurance only to your workers or also make it available to their families and how much of the premium costs you ask employees to share. Other costs include the amount of time you and other team members may spend researching, evaluating, putting in place and managing your health insurance plan each year; buying and maintaining technology you may use to help manage your benefits program; and fees you will pay a professional employer organization, broker or other consulting service to do much of the legwork for you. In many cases, these fees are well worth it because they offset the time company leaders would otherwise have to devote to the process.
4. Decide Which Health Insurance Plan Fits Your Company’s and Your Employees’ Needs
The five basic types of managed care plans – the kind almost all small and medium-sized businesses offer – are preferred provider organization (PPO), health maintenance organization (HMO), point-of-service (POS) and high-deductible health plan (HDHP). One of these managed care plan types likely will meet your company’s small business insurance needs.
5. Consider the Buying Power a PEO May Provide
Small to mid-sized businesses with 10 to 50 employees or more don’t have large groups to offer a health insurance provider and therefore don’t have the same buying power a large company has. Partnering with a professional employer organization can give smaller businesses access to affordable health care benefits on par with those of much larger companies. A PEO combines all of its clients’ employees into one large group, spreading out risk and offering each small business a higher-caliber plan at the most competitive rates available.
While choosing the best small business health insurance for your company demands concentrated time and attention, it doesn’t have to be cold sweat-inducing. Use the tips above to effectively evaluate the health care options available to your company and narrow down to the one that is the best fit for your employees and your business.
For help in that process and to learn how a PEO could both give you better rates and expand the benefits you offer, contact Axcet HR Solutions.