Small business health insurance doesn’t have the best reputation amongst both employees and employers. In fact, many small businesses not held under the employer mandate opt out of small business health insurance altogether, leaving their employees to fend for themselves. This is a move in the wrong direction.
While it’s true that the average cost of employee health insurance premiums has only gone up, especially for small businesses, this doesn’t mean there aren’t options. Figuring out small business health insurance shouldn’t be the most complicated part of running your business. Here’s how to pick the best small business health insurance to help your team stay protected.
1. Group Coverage Is Almost Always Better
When it comes to employer health coverage, group coverage is almost always better for employees. Individual health plans cover individuals and families, but it usually costs more. Group coverage is insurance that businesses purchase to offer to eligible employees and their dependents.
Not only is group coverage usually more affordable for employees, but it offers greater coverage. The premiums can be split with employees depending on your budget, making it a flexible choice. In some states, individual sole-proprietors can even get group coverage. Learn more about group health insurance for self-employed individuals here.
2. Pay Attention to the Tax Credit
Another important step when picking the best small business health insurance is to pay attention to any tax credits. If you purchase a plan through the Small Business Health Options Program (SHOP), you might be eligible for a tax credit to help afford the right coverage.
How do you know if you’re eligible? You need to have fewer than 25 full-time employees, offer health insurance to all of these employees, and pay salaries of under $50,000 per employee on average. Finally, you also need to be paying at least 50% of the premium cost.
3. Consider the Monetary Costs
Of course, before making your decision, you need to consider all of the monetary costs. It’s no secret that small business health insurance isn’t cheap, especially if you don’t qualify for a tax credit. The monetary cost for your business will depend on the benefits you’re providing, who you’re covering, and the percentage of the premium that you cover.
Most employers cover around 80% of the premium, so this is the best number to aim for. However, you’ll also need to factor in extra ess such as if you’re using a broker or third-party service for health insurance.
4. Use a Purchasing Alliance
Finally, using a purchasing alliance can help keep costs down as a small business. Also known as a private health exchange, a purchasing alliance is something that brings small businesses together so they can purchase health insurance as a single group. This gives small businesses larger purchasing power, keeping costs down.
With this option, your employees have more options. They can choose the plan that works best for their budget and health needs. Because you’re purchasing within a larger group, you can likely cover a greater portion of the premium. However, it’s important to note that you won’t be eligible for any tax credits through a purchasing alliance.
Why Offer Health Insurance?
Finally, why bother with health insurance at all as a small business or single business owner? Having employees who are healthy and have access to affordable healthcare is always a good thing. Here are some clear benefits that should matter to you as a small business:
- Healthy employees are more productive
- As a self-employed individual, you have greater job security
- Attract better talent
- Receive tax benefits
- Follow the law (if you have 50+ employees)
As you can see, health insurance really shouldn’t be optional for small businesses. Despite rising costs, there are more options than ever for making the right choice for your business and employees. It’s time to make a smart decision that will bring out the best in your organization.
