Health Coverage for Small Businesses: What Owners Need to Know

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Small businesses are the backbone of the American economy, employing over 47% of the workforce. As a small business owner, you have a lot on your plate. From managing employees to making sure the bills are paid, it can be challenging to find time for everything. However, one area you can't afford to overlook is providing health insurance to your employees. Small group insurance is a great way to offer affordable coverage to your team, and there are plenty of reasons why you should consider it.

First, let's define what we mean by small group insurance. Generally, this refers to health insurance plans that are designed for businesses with 50 or fewer employees. These plans are regulated by the Affordable Care Act (ACA), which means most offer the same essential health benefits as individual and large group plans. However, small group plans can be more affordable because the risk is spread out among a smaller pool of people.

So, why should you consider offering small group insurance to your employees? Here are a few arguments in favor of doing so:

It's a great way to attract and retain top talent.

In today's job market, employees have more options than ever before. If you want to attract and retain top talent, you need to offer competitive benefits packages. Small group insurance is a great way to do that. By offering affordable coverage, you'll be showing your employees that you care about their well-being and are invested in their future.

It's good for your bottom line.

One of the biggest advantages of small group insurance is that it can save you money. Because the risk is spread out among a smaller group of people, premiums are often more affordable than individual plans. Additionally, by offering coverage to your employees, you may be able to qualify for tax credits and deductions that can help offset the cost of providing insurance. It has also been shown that employees with coverage that allows them to have their preventative visits covered are less likely to take sick days for unexpected illnesses.

It's the right thing to do.

As a business owner, you have a responsibility to your employees. Providing health insurance is not only good for your business, but it's also the right thing to do. Your employees rely on you to provide them with a safe and healthy work environment, and that includes access to affordable healthcare.

Now, let's look at the other side of the coin. While there are plenty of reasons to offer small group insurance, there may be some situations where it doesn't make sense for your business. Here's an argument in favor of not offering a group plan:

Your employees may be better off with individual plans.

While small group insurance can be more affordable than individual plans, that's not always the case. If your employees are relatively young and healthy, they may be better off purchasing individual plans through the ACA marketplace or through private insurance companies. In fact, some employees may even qualify for subsidies that can help them pay for their coverage or plans that are significantly less expensive than what could be offered through a group plan. For the most part, group plans are less expensive for the individual if there are enough employees to spread out the risk and costs. In general, more than 20 employees is where the group plan starts being less expensive for the individual than having each individual find their own plan.

With less than 20 employees, especially if the majority of them are young and healthy, it is less expensive for both the individual and the company to offer to assist in covering their individual plans with bonuses or higher competitive pay. If you have a small number of employees and many of them are unhealthy, it can also be beneficial to have each individual find the plan that covers their individual needs better since each employee may have different insurance needs.

If you decide not to offer a group plan, you may still want to consider offering a set amount of money as a bonus towards your employees' healthcare costs. This is often referred to as a health reimbursement arrangement (HRA). With an HRA, you can offer a tax-free stipend to your employees that they can use to purchase their own healthcare coverage, but it can limit the options that are available to them since they must purchase a high deductible health plan (HDHP) which is Affordable Care Act compliant. HRAs can be a great option for businesses that want to offer some level of support to their employees without taking on the administrative burden of a group plan.

The other way to be able to offer a set amount of money or percentage of their health coverage premiums is by miscelleneous bonuses or stipends that can be negotiated before the employee signs on to work. A health coverage advisor can help small business owners get an idea what insurance normally costs in addition to assisting employees in finding the best option for their needs.

So, how do you decide whether to offer small group insurance or not? Here are a few factors to consider:

The demographics of your workforce.

If your small group of employees are relatively young and healthy and there are only a few of them, they may be better off with individual plans. However, if you have a larger, more diverse workforce with a mix of ages and health conditions, a group plan may be the way to go.

The cost of coverage.

Whether you think a small group plan will be more affordable than individual plans or not, it's important to compare the costs of different options. Contact a health coverage advisor to look at premiums, deductibles, and out-of-pocket costs for each plan type to determine which option is the most cost-effective for your business and your employees.

The administrative burden.

Offering a group plan comes with administrative responsibilities, such as managing enrollments and communicating with the insurance company. If you don't have the time or resources to handle these tasks, a health coverage advisor can keep you out of the insurance vusiness, while helping you offer the best benefits for your employees.

Your budget.

Ultimately, the decision to offer small group insurance or not may come down to your budget. While offering insurance is a great way to attract and retain employees, it's important to make sure that you can afford it. Consider the cost of insurance premiums, as well as the potential tax credits and deductions you may be eligible for.

Small group insurance can be a great way for small businesses to provide affordable healthcare coverage to their employees. It can help attract and retain top talent, save money, and demonstrate a commitment to employee well-being. However, it's important to weigh the pros and cons of offering a group plan versus individual plans, and to consider factors such as the demographics of your workforce, the cost of coverage, and the administrative burden. Ultimately, the decision should be based on what's best for your business and your employees.