3 Tips for Choosing Health Care for Your Small Business
The health care insurance landscape isn’t an easy one to navigate, especially for busy small business owners. These concerns are always top of mind with nearly 80% of small business owners worrying about the cost of coverage — and providing health benefits is a must if businesses are to compete effectively in the market.
However, saving money isn’t always the most important consideration when it comes to choosing health care for your small business. As you weigh your options, here are three things to consider.
Determine What Matters to Your Employees
Before you choose a plan, learn more about what’s important to your employees. Poll employees on the following:
- Financial Tolerance: For example, would they be open to higher premiums in exchange for lower out-of-pocket costs? What about deductibles? Plans with high deductibles generally have lower premiums.
- Doctors or Facilities They Visit: This will help determine whether they are in-network for any plan you consider.
- Voluntary Plans: Do they value voluntary dental and vision plans (where the employer doesn’t contribute)?
- Wellness Programs: Are wellness programs, such as health and wellness coaching, preventative workplace screenings, workshops and 24-hour health lines, important to them?
Understand the Cost Factors
When budgeting for a health insurance policy, many cost factors come into play aside from deductibles, premiums and the type of plan you’ll offer can make a big difference to your bottom line.
For example, if you opt for a traditional group health insurance plan, you’ll split the cost of premiums with your employees. In this scenario, employers typically contribute approximately 80% toward the premiums for single coverage and 70% for family coverage. To gauge what you can afford, evaluate your cash flow, access to funding and risk tolerance. And don’t forget that tax credits can offset costs.
One way to make a group plan more affordable is to opt for higher deductibles, by offsetting those costs with a Health Savings Account (HSA). HSAs are only available to qualifying high deductible health insurance plans and they’re designed to reduce health care insurance costs for you and your employees. Think of an HSA as an accompanying savings plan in which employees contribute pre-tax — this money can be applied toward medical expenses, offsetting the high deductibles of the main plan.
Another factor that can sway costs is prescription drug coverage. Here you have the option to offer full coverage for name-brand drugs, limited prescription drug benefits (such as generic-only drug coverage) or one without prescription drugs. Finally, think about who will qualify for coverage. Can you afford to cover employees-only, or employees and their spouses/dependents? What about part-time employees?
Get Help Evaluating Your Options
When choosing health care for your small business, make a point of consulting an insurance broker or agent. They can answer any questions you have about costs per employee, plan options and coverage limits, how much administrative help the insurance company offers (managing open enrollment paperwork, etc.) and how robust their customer support is.
To help evaluate your options, an agent will want to know how many employees you have, their demographics, how much you’re willing to spend per employee and the contributions you can afford.
Choose the Right Plan for Your Company
Getting the most value from a health care plan is about achieving a balance between meeting the current and future needs of your employees while ensuring you don’t put your business in financial jeopardy. Spend time doing your homework and work with a broker or agent to make sure your decision is an informed one.