As a business owner, providing small business health plans for your employees is a very important decision you have to make. The decision to have a health plan, however, is only the first step. There are other important decisions to make along the way.
– Decision 1: How much can you afford? Health plans are expensive, and as a small business owner you will likely be facing rising costs in insurance premiums. An average small business pays out approximately $1,500 per month per employee for a medium-level health insurance plan. As you have a need to hire more employees, keeping this number in mind is important. Thankfully, insurance premium payments are 100% tax deductible, but you’re still paying money. This means you’ll have to decide what impact this will have on your bottom line.
– Decision 2: How much will your employees pay for their insurance? Most employers pay at least 50% of an employee’s health insurance premium. Whatever you don’t pay for as a business, your employee will need to pay for personally. When it comes to dependents, there are other considerations to take into account. Will the business pay for a percentage of dependents’ health coverage? Depending on the type of business you have, and the number of dependents your employees have, this is a crucial decision that could have a dramatic impact on your small business health insurance plan.
• Decision 3: What type of savings plan will you use? A Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA) provides an attractive way for you to save money as a business owner, and for your employees to save up for medical costs. Both HSAs and HRAs can help to lower your monthly premium costs, while still providing for employee coverage needs.
• Decision 4: Will you offer supplemental health benefits? The more appealing your company health plan, the more likely you’ll be an attractive employer. If you’re part of an intensely competitive labor market, you’ll want to offer more additional benefits to prospective employees. At the very least, it is wise to make supplemental health benefits available, even if you can’t furnish the cost for all of them. Offering an HSA as an alternative to supplemental health benefits is a strategic move, both for cost-savings on premiums and in attracting potential employees.
There are plenty of decisions to make when considering health plans, and these are only a start. These key decisions are not ancillary to