7 Ways Small Businesses Can Offer Affordable Health Benefits
There are several misconceptions about health insurance and small businesses.
One of the most common is that offering health benefits to employees is too expensive for small businesses.
Even though it is true that providing health benefits can be a significant expense for small businesses, offering the best health plans for your employees doesn’t have to break the bank.
With a bit of planning and some smart choices, small companies can provide affordable health benefits that meet the needs of their employees.
1. Take advantage of government incentives
One of the best ways to offer affordable health benefits is by taking advantage of government incentives.
Many US states and municipalities offer tax breaks or other financial assistance to small businesses that provide their employees with health insurance coverage.
Employers are required to provide health insurance to nearly all full-time employees. Section 6055 of the Affordable Care Act (ACA) imposes this requirement, called the employer shared responsibility provision. They also need to file forms 1094-C and 1095-C to send them to the IRS. This provision generally applies to employers with 50 or more full-time employees (including full-time equivalent employees), but smaller businesses have a few exceptions.
2. Look for health insurance plans that offer value and flexibility
Several different health insurance plans are available to small businesses, including traditional health insurance options and newer insurance products such as high-deductible health plans (HDHPs) or consumer-directed health plans (CDHPs).
Each type of plan has its benefits and drawbacks. For example, employer-sponsored HDHPs can offer lower premiums than other policies but may require employees to pay higher out-of-pocket costs when they need medical care.
On the other hand, consumer-directed health plans usually include integrated savings accounts that can help employees pay for out-of-pocket expenses. Still, these plans may have higher premiums than other options.
3. Work with an insurance broker or agent
These professionals are experts in purchasing and selecting health insurance plans, and they can help small businesses find the most affordable plan that also meets the employees’ needs.
Many brokers and agents work with various providers, so they can access a wide range of options that may not be available directly through your insurance provider.
Additionally, many brokers and agents will offer discounts if you purchase multiple policies or enroll in specific health plans all at once. This can save small businesses time and money when managing their employee health benefits programs.
4. Offer a health savings account
Another way to make health benefits more affordable for your employees is by offering a health savings account (HSA). An HSA is a special type of savings account that can only be used for health-related expenses.
Employees can use the money in their HSA to pay for medical bills, prescriptions, and other costs that aren’t covered by their insurance plan.
When employees use an HSA to pay for these expenses, they will also save money on their taxes. This is because HSAs are tax-deductible and pre-tax, which means they help employees save significantly more than they would by using traditional health insurance plans and copays.
5. Join a purchasing pool
Purchasing pools are groups of small businesses that band together to purchase health insurance plans at a lower cost. These pools use the collective bargaining power of their members to negotiate better rates with insurance providers.
These businesses can negotiate more favorable rates with insurance providers by pooling their resources. This can be a great way for small businesses to save money on their health benefits while still providing high-quality coverage for their employees.
6. Consider self-funding
Self-funding is another option for small businesses that want to provide health benefits without breaking the bank. With self-funding, businesses pay for their employees’ medical claims out of their own pockets.
This may sound like a risky proposition, but it can be quite affordable. Companies only have to pay for the filed claims, and they’re not subject to the high premiums and administrative costs associated with traditional health insurance plans.
In addition, self-funding can offer more flexible coverage options and better customer service.
7. Access your employees’ health care spending accounts
If your employees have health care spending accounts, they can use them to pay for various out-of-pocket medical expenses. Employers typically fund these accounts and allow employees to set aside pre-tax dollars to cover deductibles, co-pays, and other out-of-pocket costs.
Employees can save money on their taxes and stretch their healthcare dollars further by using their healthcare spending account. This is a perfect option for small businesses that want to offer affordable health benefits without raising premiums.
No matter what type of health insurance plan you choose, it’s essential to ensure that the plan offers value and flexibility for your employees.
The best health insurance plans offer a wide range of coverage options and allow employees to tailor their benefits to meet their individual needs. Additionally, look for plans that provide a variety of discounts and perks, such as gym memberships or prescription drug savings cards.
By offering a comprehensive and flexible health insurance plan, you can give your employees the coverage they need without breaking the bank.