Offering competitive health insurance is important for the well-being of your employees and the good of your company overall. In fact, a recent Glassdoor survey showed that healthcare was one of the five most important benefits to employees. Offering a quality healthcare package can help you retract and retain top talent on a competitive market, but costs can add up fast – especially for very new companies.
Despite the fact many business owners may balk at sizable premiums, there are creative ways to keep costs down and offer a comprehensive package to ensure employees are able to get their basic needs met. If you are looking into healthcare coverage for your small business, below we will go over the legal requirements and various means to healthcare costs reasonable.
Offering a healthcare plan can help employees feel valued, creating a more positive company culture overall. As an employer, offering quality healthcare is one of the most important ways to retain talented employees long term.
Small Business Health Insurance: Current Regulations
Not every single small business is legally required to offer health insurance. According to the Affordable Care Act’s Shared Responsibility Provision, businesses with 50 or more full-time employees have a legal obligation to offer health benefits.
If you have less than 50 employees, you are under no legal obligation to provide health care coverage, but you may still want to look into affordable options. While very small businesses might not have as large of a budget, there are many ways to find affordable plan offerings.
One way is to see if you are possibly eligible for a tax credit. Under the Affordable Care Act, businesses with fewer than 25 employees are eligible for a tax credit if they pay an average wage of $52,000 or less. A tax credit can help lower your monthly payment, making providing insurance vastly more affordable.
If your company has fewer than 10 full-time employees and you pay an average annual wage of $25,000 or less, you may qualify for a full tax credit – which could potentially save you even more.
How Much Does Small Business Health Insurance Cost?
Small business health insurance comes with a number of different costs, most of the expenses related to premiums and deductibles:
- A premium is a regular monthly payment to keep you plan
- A deductible is the sum amount a policyholder must pay out-of-pocket before their insurance kicks in.
Your business is responsible for paying at least a partial amount of your employees’ premiums each month, with some companies covering 100% of premiums for their employees.
Your business can decide how much of the monthly premiums you pay. You can choose either a fixed percentage between 50 to 100% or pay a fixed dollar amount your employee can apply toward their monthly premium.
A fixed dollar amount per employee can save you money. For example, if you are paying $100 per employee for healthcare, then it does not matter if your employee chooses a Bronze, Silver, or Gold plan; your company pays the same amount. If you are paying a fixed percentage of your premium, however, you will end up paying more if an employee selects a higher paying plan.
On the other hand, paying a fixed percentage can help with employee retention. If employees are able to access higher quality healthcare through your company, this can incentivize them to stay.
Small Business Health insurance Copayment
A small business health insurance copayment refers to costs your business may be required to pay. Copayments are often for health supplies and services such as specialist office visits, ER or ambulance services, and different types of therapy.
Not every plan has small business health insurance copayments. HMO plans – which have contractual agreements to various healthcare providers – tend to be more likely to require copayments, but PPS plans, POS plans, and EPO plans may have copayments as well.
Out-of-pocket costs are payments you make personally for medical services, and an out-of-pocket maximum is the yearly limit for how much you are expected to pay out of pocket.
The out-of-pocket maximums vary depending on the type of small business health insurance plan you offer. Plans with lower out-of-pocket maximums have higher monthly premiums, while plans with higher out-of-pocket maximums have lower premiums.
Single Health Plans Or Multiple Options
You can offer employees a single health plan, which means every employee would have the same basic coverage. Or, you can offer them a selection of different plans to choose from based on their needs.
The advantage of offering multiple plans is that individual health insurance needs can vary a lot from person-to-perform. A younger, relatively healthy employee may prefer to pay a lower premium for a plan with less coverage, while an employee with chronic health conditions may need a more extensive plan.
While employees appreciate having options, giving options can sometimes result in added costs for your company. If you are a small business with a limited budget, this may not always be feasible. When deciding on single health plans or multiple plans, you will have to spend some time looking over your budget and determining your price range.
What Factors Affect Health Insurance Cost
Various factors can include health insurance costs, including:
- The general age range of your employees
- What amount of the premium your company will pay
- Your choices regarding out-of-pocket costs
- Your location
When insurers are setting premiums, they are legally allowed to make determinations about costs using the above factors. Things like pre-existing conditions and medical history, however, do not factor into the ultimate cost of your health insurance.
Figuring out a good price range for your company can be a tricky balancing act. More expensive plans may eat up a lot of your budget, but they can also help with long-term retention and overall employee satisfaction.
The best way to determine the right price range for your company is to book an appointment with an insurance broker or a consultant. Not only can they help match you with plans that meet your needs, consultants often have working relationships with major insurance providers and may be able to get you a deal.
Small Business Insurance: The Bottom Line
While not every small business has a legal obligation to provide health insurance, a robust benefits package can certainly attract top talent. Health insurance premiums can be expensive, but most companies can find something within their price range with careful budgeting and planning.
Need some help deciding? UBC Insurance Solutions, Inc. works one-on-one with clients to find affordable, effective employee benefits packages. Reach out here to set up a consultation.