A small business owner might find the idea of offering health insurance through his business daunting. It’s not as difficult as it might seem. Here are 5 tips for starting group health insurance for your small business.
Tip #1: You aren’t required to pay the premiums.
So long as you have 50 or fewer employees, you are not required to cover any percentage of the premium. (If you do, what you pay can be written off as a business expense.) But either way, group health insurance for your small business doesn’t have to break the bank.
Even if you don’t pay any of the premiums for your employees, you are still offering them a point of access to health insurance that likely isn’t available to them on the individual and family market.
Most plans at healthcare.gov have gone to tiny networks with few doctors and hospitals. Through your business, you effectively give them and their families a door to better coverage and options.
Tip #2: Save you and your employees money by not paying premiums for benefits that likely won’t be used.
A quick story here: I spoke with a small business owner. He offered a silver plan to his employees. Twelve of them rarely went to the doctor, and two had chronic conditions. He offered the silver plan specifically because he wanted to take care of those two employees. The difficulty was that it was costing him an extra $150 to $200 in premiums per month per employee.
I had a solution that he didn’t know was available. He could offer two plans: a bronze and a buy-up silver option. The healthy employees opted for the bronze, and the ones with medical issues could still get their silver level benefits. He cut premiums across the company and all his employees were happy.
Tip #3: Consider supplemental benefits.
There’s a second half to the story above. The business owner used a fraction of the premium savings to purchase supplemental benefits for his employees. These plans were cheap and would pay out money to the employees for an accident, hospital stay or critical illness.
By adding supplemental benefits, he significantly reduced his employees’ financial exposure to their high deductible bronze plans. You can do this too.
Tip #4: Benefits attract and retain quality employees.
Consider the work of finding and training a quality employee. They’re a huge part of keeping your business running. If they leave for greener pastures, you have to find and train a replacement. That takes time and money and adds to your mental stress. There’s also a lower level of efficiency and customer service as your employee is going through training.
The Center for American Progress conducted a study and found that the average cost of replacing an employee is around 20% of their salary. Even providing supplemental benefits only can retain quality employees.
Tip #5: If your employees are healthy, consider a self-funded health plan.
Self-funded plans divide your premiums into three parts, and one of those is a claims fund. As your employees have medical bills, they are paid for from the claims fund. If the claims fund is depleted, then the insurance company covers the rest of your employee’s medical costs for the year.
However, if the claims fund is not depleted, you might receive half of what’s left after an additional fifteen month wait.
Possibly with that information you might feel cheated, that the insurance company gets half of the claims fund – but keep in mind that with traditional health insurance, the premiums are never refunded.
A self-funded plan requires patience and can be a good fit for long-term planners and healthy groups.
If you want to talk to an agent about group health insurance for your small business, feel free to email or call. If you found this page helpful and want to pass it to your employer, we’d be happy to talk with them.