Let’s face it. A paycheck isn’t enough when it comes to recruiting and keeping the best talent for your business. Benefits matter to employees, and that’s understandable considering the rising costs of health care.
In fact, according to a recent survey by an employer-review site, 57 percent of job seekers say they strongly consider the benefits an employer offers before accepting a new job. As a small business owner, you may be missing out on valuable workers if you don’t offer a benefits package. After all, the U.S. Congressional Budget Office expects more than 150 million to have employment-based coverage in any given month through 2026.
But, how do you get the best health plan for your small business and employees so you can avoid a competitive war for talent with large companies? Here’s what you should consider before choosing employer-provided insurance, and the help available to ensure you get the most out of your options.
Assess Your Needs
One of the most important steps in getting the best group health insurance is to assess your needs and gather information. These include your:
Budget: Figure out what you can afford to pay as a business owner. This number will play a role in what plan you choose, and what premium percentage you want to cover. Don’t forget to take into account any costs beyond the premiums, such as time and money spent on administrative tasks after a plan is set up.
Company’s census: Gather information about your employees, including the number who may need coverage, any health coverage they may need, and their names, ages, number of dependents and zip codes. This includes your full-time employees, as well as part-time employees if you choose to offer them benefits.
Business details: Before applying for any type of coverage, you’ll need the following information:
Business name and address
Tax ID or Employer Identification Number
Business start date
Industry code, or SIC
Once you have this information handy, you can begin looking at which options provide you with the best health insurance for your business.
Choose How To Shop
There are a handful of ways you can seek the best employer-sponsored health insurance if you have employees. Here are a few options, as well as the pros and cons of each:
Purchase Insurance Directly
If you’ve done the research yourself and already know what kind of employee benefits and coverage you want to provide, you can contact a health insurance company directly. While some companies only will work with a broker, many will work with a business owner to select a plan.
Pros: If you’re a go-getter, you can go right to the source. And, if you enjoy negotiating, you may be able to get better rates.
Cons: There are a lot of options for group health insurance, and it can get overwhelming fast. You’ll also have to handle by yourself researching insurance options, filling out the applications and working with customer service.
Use SHOP Exchange
Each state, including California, has its own version of a health insurance exchange through the Affordable Care Act. This online marketplace allows small businesses to purchase health coverage if they’re looking for group coverage. Each health insurance plan is tiered based on minimum benefits, and are labeled based on pricing structures such as premiums and copays.
Pros: Purchasing health insurance on SHOP may make you eligible for health care tax credits. This exchange also allows you to compare plans by filtering out what you do and don’t need.
Cons: Like contacting the health insurance companies directly, this option makes you do 100 percent of the work. Health insurance companies also may leave the exchange, and if your income changes during the year, it could affect the subsidy you receive.
Partner With An Alliance
Known as private health exchanges, these purchasing alliances bring small businesses together to buy health insurance as a group. Employees can choose which plans they want, and in some cases, each employee may have a different premium. However, the costs remain the same for the small business owner, who sets across the board how much he or she pays per premium.
Pros: Because there are many small businesses together in a group, health insurance may be purchased at a lower cost.
Cons: A less healthy employee may get stuck with a plan that in the long-term is more costly. There also are no tax credits or subsidies offered with this type of exchange.
Enlist the Help of a Broker
Working with a licensed insurance broker provides many benefits for a small business owner. In addition to doing the legwork to find health plan options, a broker also can offer personalized advice based on your needs.
Brokers also will help you understand the complexities of health insurance, and help you make sense of what options are available to you. Brokers get paid a commission, but by the insurance company. So, working with a broker is at no cost to you.
Pros: Working with a broker saves you a ton of time and effort. A broker will help you with paperwork, ensure your business is compliant with insurance laws, assist you with choosing the right plan, and help you with claims and renewals.
Cons: You’ll be relying on a broker to help you select the best health plan for your team. It’s important that you find someone who understands the needs of your business and employees. For more information on how to find an exceptional broker, read our article, Top 4 Traits To Look For In A Small Business Health Insurance Broker.
Compare Your Options
Once you’ve figured out how you want to go about shopping for your small business health insurance plan, you’ll need to assess your options. This is where the benefits of working with a health insurance broker are especially evident, since navigating these choices can be overwhelming.
To get the best insurance for your small business, you’ll need to determine what areas of your plan are most important to you. Here are some details to consider:
Do you prefer a wider range of health coverage, or are lower premiums and copays more important? Finding the right balance that meets the needs of all your employees can be a challenge.
If workers have more serious health care needs and incur more medical expenses, for example, better coverage might be a safer option. If your workforce is healthy and prefers paying out-of-pocket for medical expenses, a higher deductible and lower premium might be preferred.
There are several types of health plans from which to choose for your business. Here are a few options to consider:
Health Management Organizations (HMO) plans are limited and generally have a goal of cutting costs. These plans may work well if you have a tighter budget and have overall healthy employees. However, specialist visits or unforeseen illnesses can leave employees with expensive medical bills.
Preferred Provider Organizations (PPOs) are much more flexible and specialist-friendly, but tend to be higher in cost for routine medical care. They’re beneficial for people who like to shop around for their medical doctors because they allow you more often to go outside your network without a harsh penalty. However, your employees will have a deductible to pay before insurance kicks in.
Point of Service Plans (POS) are a combination of the two above. You’ll still need a referral from your primary care physician to see a specialist, but like a PPO, you won’t be penalized as much for seeing a doctor who is out of network. Your employees may also experience higher out-of-pocket costs or coinsurance requirements.
It’s important to note, as an employer, you are not legally allowed to ask your staff about their medical issues or history. However, you should try to understand which priorities in health coverage mean the most to your employees, and which ones mean the most to you to offer them.
Some employees may also prefer to have greater choices in either the plan they choose, or the doctors they see.
When it comes to attracting and retaining the best employees, health insurance benefits matter. But, navigating through your options, as a small business owner, so that you can offer the best health insurance to your employees can be a daunting and overwhelming experience.
A licensed insurance broker can help you understand the complexities of finding the best health insurance for your business and make sense of the available options.
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