Many people rely on their employer to facilitate affordable healthcare for themselves and their families. If you’re a small business owner, you know that choosing the best coverage for your team can be a daunting task. But by taking it one step at a time, the process doesn’t have to be so overwhelming.
We’ve put together a list of all the factors to keep in mind as you begin your search for the perfect healthcare option that will benefit both your business and your employees.
Importance of Offering Competitive Healthcare Benefits
If you’re looking for ways to improve your business overall, examining your employee benefits package could be a great first step. Plus, the Affordable Care Act mandates that employers with more than 50 full time employees must offer health benefits or pay a tax penalty. Here are a few ways great healthcare can make a difference for you:
- Increase the appeal of your business to recruit high-quality talent
- Reduce turnover rate
- Improve morale
- Healthier employees
- Better job performance
Factors That Impact Health Insurance Costs
The first step in the healthcare hunting process is figuring out how much money your business can devote to it. Average annual premiums in 2016 were $6,435 for single coverage and $18,142 for family coverage. The average percent of health insurance paid by employers is 83 percent for single coverage and 72 percent for family coverage. With these numbers in mind, you can evaluate the number of employees you have and what percent of payroll you can realistically cover.
Once you know how much you can spend on health benefits, you can begin to compare plans that fall within your price range. Some key factors that will affect the price of healthcare plans include:
- Insurance Provider
- Type of Plan
- Network of Providers
- Contribution Strategy
- Type of Occupation
- Economy of Scale (company size)
It’s a good idea to weigh the importance of these factors and how they relate specifically to your location and employee needs. Working with an insurance broker can help you narrow down the choices available within your budget and is also a good way to make sure you’re adhering to all the legal requirements.
Once you’ve identified which providers are available within your budget and preferred buying method, it’s time to narrow down your selection based on the following criteria:
- What do you want your plan to cover?
- Will you cover employee spouses or dependents?
- What are the limitations of each plan type?
- How large is the provider network? (which physicians and hospitals are contracted with the provider?)
- Think about premiums, deductibles, copays, and coinsurance
Ways to Buy a Health Insurance Plan
Once you’ve gained a better sense for the type of coverage you want, you can begin to think about how you’d like to actually purchase the insurance.
Also known as health insurance agents, they can provide you with a direct link to health insurance companies and/ or the government marketplace. One of the biggest benefits of working with a broker is the personalized attention and guidance they provide. However, paying for this specialized service and attention can cost more than some alternative options.
Small Business Health Options (SHOP)
Part of the Affordable Care Act, SHOP is available to businesses between 1 and 50 employees and offers different levels of coverage (bronze, silver, gold, or platinum packages).
Private Health Exchanges
Also called a “purchasing alliance,” private health exchanges are a privatized version of the SHOP marketplace. Your business pays a set amount per employee, while each individual employee chooses their level of coverage.
It’s different from SHOP in that you don’t get tax credits or large selection, but the packages are more competitively priced and often include agents who can advise you.
If you want to do your own research, purchasing directly from a provider could save you money. The downside is that many providers don’t sell direct, which will limit your options. The other downside is that you will be responsible for all the paperwork regarding enrollment, billing, eligibility, and claims—which can be a lot to keep track of.
Trade & Professional Associations
If your business belongs to a trade or professional association, you may already be covered by a group plan, in which case, your search will be a lot easier.
Consider an HSA Program
An HSA is a tax-favored savings account designed to help employees save for future medical expenses. HSAs are only permitted when working in conjunction with a high deductible health insurance plan. Your employee can apply their HSA savings toward their deductible or any other medical expenses that aren’t covered under the plan (such as dental and vision care). Additionally, an HSA provides a triple tax benefit: it is invested tax-free, grows tax-free, and can be withdrawn tax-free as long as the withdrawal is used for medical expenses.
From calculating your budget to selecting a purchasing method, there’s a lot that goes into finding the perfect healthcare coverage for your small business. The best approach is to work with experts in the field who can help guide your decision and ultimately select a health insurance plan that will be most beneficial to the majority of your employees. And if you decide that you’d like to include an HSA as part of your benefits package, Union Community Bank will be glad to provide you with an HSA to keep your employees happy and healthy.