As a small business owner, you likely know that one way to successfully compete for customers or clients is to offer them something your competitors don’t. The same logic can apply when you’re competing for employees.
The main benefit employees want is health insurance. According to a recent benefits study, health, dental, and vision benefits topped the list of desired benefits for employees.*
However, for a small business with just a handful (or fewer) of employees, offering health benefits may seem too complicated to manage and too expensive to afford.
Historically, this may have been true. But as they often say in the medical profession, “Maybe you should get a second opinion.”
We’ll do our best to provide our take on small business health insurance.
We’ll take a look at the incredible benefits of providing health insurance and how you can put together a plan for your employees.
I know several people who have their own businesses. One in particular has a very simple (and for him, effective) way of running his operation. He puts all tasks and activities into one of two piles: Things I Have To Do and Things I Want To Do.
If you’re at all like my friend, you may ask, “Is health insurance a have-to or a want-to?” Much of that depends on how small your small business is. Under the Affordable Care Act (ACA), if your business has 50 or fewer full-time or full-time-equivalent employees, you’re not required to provide health insurance.
So it generally falls onto the want-to pile, though you may find that hiring can be tougher when benefits aren’t on the table
As we mentioned above, employees rank health insurance coverage at the top of their benefits needs. So it seems reasonable to think that giving employees something they value can go a long way to not just getting them onboard, but keeping them as well.
And offering health benefits has, well, many other benefits for your business.
Healthier employees do more for your business. One study found that 60% of businesses that offered health insurance saw higher productivity. One reason could be that a healthy employee is less likely to call in sick.
The CDC also supports the connections between healthy employees and productivity. They cite that health benefits can help employees' families stay healthier, which can reduce the need for an employee to miss work to care for a sick family member. Having reliable health insurance for an employee and their family, can take away much of the stress of an illness.
We’ll get into the details a bit later in this article, but there are a number of ways that offering a health plan can save you (and your employees) some serious cash.
As a business owner, you know that an employee who likes their job, feels valued, and is fairly compensated will generally do their best work.
Just think about the times you may have been someone else’s employee (I’m having a not-so-pleasant flashback of pushing supermarket shopping carts in the snow). Having benefits such as health insurance can make you feel better about your job, even if it wasn’t the greatest.
It’s fun quiz time. How many small businesses with 3 to 9 employees offer health coverage?
If you picked “d,” congratulations. While a pessimist might look at that stat and see more than half the businesses didn’t provide coverage, an optimist might say nearly half of them did. And a smart business owner might go a step further and say, “If 49% could offer health insurance, maybe there’s a way I could as well.”
Even with the advantages of offering a health plan, many small business owners feel that health insurance options aren’t designed for them, and to some extent historically, this was true. This often leads to some questions. Not to worry. We’ve got some answers.
Health insurance costs are often spread out among three main categories: premiums, deductibles, and out-of-pocket costs.
Much as it is with business insurance, this is the cost for the insurance during the term of the coverage. As a business owner, you can pay 100% of the premium or the premium can be shared between you and each one of your employees who elects coverage.
This is the amount your employee will pay toward medical expenses before insurance kicks in. Depending on the health plan, deductibles can vary for different types of treatments and procedures. There also can be items without deductibles, such as annual check-ups.
These are costs not covered by the insurance policy. They can include deductibles and copays, which are usually paid by the employee.
All three of these can factor into the total employer cost of a health plan. As an employer, the premium is the cost that will likely affect you the most. Generally speaking, plans with lower deductibles and copays often have higher premiums and vice versa.
Do you want to provide just medical coverage, or do you want your plan to be more comprehensive and include dental and vision coverage? As you might guess, the more coverage you offer, the more your plan will likely cost. But don’t let that deter you - there is likely a health insurance plan for your business size available to you.
Premiums. Deductibles. Coverages. There’s a lot to understand, consider, and factor into offering a health insurance plan for your business. That could mean a considerable investment of time (as well as money or administrative headcount).
You’re busy. Having a friendly expert to help with that could come in handy right about now.
We understand that, in general, insurance can seem complicated, and finding the right coverages and policies also can take time away from running your business. That’s a big reason why we’re here.
We’ve helped tens of thousands of small business owners find affordable business insurance. We know first-hand how important it can be to make the process fast and easy.
These can often vary from state to state and from insurer to insurer, but here are some basics you’ll need to qualify:
That usually means documentation such as articles of incorporation, articles of organization, or a business license.
Generally, at least one full-time (FT) worker is enough to qualify. Sometimes, it’s two. In many instances, you as the owner can count as an employee, as long as the other employee isn’t your spouse.
At least one FT employee needs to enroll in the plan, and you’ll likely need to cover at least 50% of the employee’s premium.
The short answer here is: any time. While many individual health plans have a specific enrollment period, a group plan has much more flexibility. If you’re looking to purchase your first business health insurance plan, you can enroll at any point during the year.
This can be a confusing topic for many people. There are two important points to remember when it comes to open enrollment.
While we’re on the subject of cost, it might be a good time to answer that question. A small business health plan can be less expensive than an individual one. In general, about 10%-20% less. Another thing to consider is that there are generally more small business health plans available as compared to individual plans on the marketplace.
However, there are some considerations to keep in mind. If you make $48,000 a year or less, you may be eligible for federal subsidies that could make an individual plan a better choice.
Having a small business health plan can provide some tax advantages, which could reduce your overall cost. This can vary, based on a number of other factors, so we recommend checking in with your accountant or tax advisor to better understand how your business might benefit.
Spend even a little time looking for insurance and you’ll likely discover there are a lot of difficult and time-consuming ways to try to find what you need. We know that doesn’t make sense for a small business owner. Our partners at SimplyInsured know that as well.
They can make putting together a health insurance plan for your business, well, simple. One click here can get you started. It can’t get easier than that.
Business leaders such as J. W. Marriott and Richard Branson have pointed out the connection between caring for employees and caring for customers. Happy employees are more likely to do what’s needed to keep your customers happy.
While there’s no doubt that a lot goes into creating employee satisfaction, offering a health insurance plan can potentially go a long way to making your people feel valued and secure.
To learn more about small business health insurance, be sure to check out these helpful articles from SimplyInsured.
As a 9-year-old at summer camp, I hated it — especially after being pulled screaming from the pool during the swimming competition. While this left me without an aquatic achievement patch, it also inspired the letter to my parents that got me an early release from Camp Willard. That showed me the power of writing. I’ve done my best to use it only for good ever since, such as writing helpful articles for small business owners.
This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer
*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.