Small business health insurance has earned a reputation for being notoriously complicated. Let’s face it: dealing with health insurance as a small business isn’t easy. That being said, it also is necessary. If you want to keep your best employees, encourage top performers to join your team, and encourage your employees to lead a healthy lifestyle, you need to offer some form of health benefits.
The importance of small business health insurance can’t be understated. In fact, 56% of U.S. adults with employer-sponsored health benefits are more likely to stay with a company longer if they like their health plan. That means you can’t slack when it comes to choosing the right option both you and your employees can afford. Here’s how to choose wisely based on the top 4 small business health insurance options.
1. Health Reimbursement Arrangement
A popular option today is known as the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). This was created in 2016, and it’s a way for businesses that have under 50 employers to offer a monthly healthcare allowance. This allowance can be used to pay for health care, whether it’s through a personal insurance policy or out-of-pocket expenses.
The money reimbursed through this arrangement is tax-free money, so this can be a great way to give employees more freedom. Businesses are able to set their own allowance, and there are no minimum contribution requirements.
2. Group Health Insurance
A lot of small businesses mistakenly thing group health insurance is out of reach. While it’s true this type of coverage is less affordable for small businesses, it’s still an option. Businesses can purchase coverage through either an insurance broker or the Small Business Health Options (SHOP) marketplace.
With this type of insurance coverage, employees will pay a fixed premium for their policy, and a portion of this cost will be paid by the employer. Finding affordable options is becoming easier as more small businesses are joining together to become larger groups for insurance purposes. Visit this page to start your search for traditional health insurance.
3. Self-Funded Health Insurance
Did you know that you don’t have to go the traditional insurance route after all? Many small businesses avoid the high premiums and costs altogether by choosing to self-insure. When a small business self-funds their insurance, the business assumes the financial risk for providing health benefits to employees.
That means the business pays each employee out-of-pocket for claims. In order to make sure this system isn’t too risky and that it stays function, the business usually outlines formal documents with a trust for funds that have been set aside for health purposes.
4. Group Coverage HRA
Finally, another alternative to high-cost traditional plans is to offer a high deductible health plan (HDHP). These are also commonly called emergency plans. They’re called this because they don’t offer much coverage for day-to-day medical care, but they do kick in if there’s a serious emergency.
Small businesses partner these plans with a group coverage health reimbursement arrangement. The business provides a monthly allowance of tax-free money in addition to the HDHP policy. The employee can use this towards whatever they deem necessary, like copays, treatment, and so on.
- Individual Coverage Health Reimbursement Arrangement (HRA)
Starting from this year, employers of any size can offer an individual coverage HRA. This individual coverage is different from the traditional Qualified Small Employer Health Reimbursement Arrangements (QSEHRA) and can cover even one employee of a business to reimburse the medical expenses, insurance premiums, co payments, and deductibles. According to Sybridmd.com, patients take the transparency in their insurance coverage as the deciding factor while choosing a job. With Individual Coverage Health Reimbursement Arrangements, both employers and the employees have the flexibility to choose the right plan. However, small business owners must have a reasonable procedure, such as informing their employees 90 days before the start of the plan year about their participation in HRA.
Final Thoughts
As long as you’re putting your needs of your employees first, you’re acting with the right intentions. Don’t overlook the power of investing in health insurance for your small business. It might sound like a small thing, but it makes a big difference.
You care about your employees, so now’s the time to show them just how important they are. If you can’t offer the right small business health insurance, they’ll likely go to someone who will.
