Small Business Health Plans: Key Decisions That Must Be Made

One of the most important decisions you can make as a business owner has to do with small business health plans. The decision to have a health plan, however, is only the first step. Here are some other decisions you’ll need to consider:

• Decision 1: How much can you afford? Small business health plans can be expensive and as a business owner you’ll be looking at rising costs in premiums over time. An average small business pays out approximately $1,500 per month per employee for a medium-level health insurance plan. As your business grows, and as you take on additional employees, keep this number in mind. Thankfully, insurance premium payments are 100% tax deductible, but you’re still paying money. This means you’ll have to decide what impact this will have on your bottom line.

• Decision 2: How much will your employees pay for their insurance? On average, employers generally pay at least half of an employee’s monthly premium. Whatever you don’t pay for as a business, your employee will need to pay for personally. When it comes to dependents, there are other considerations to take into account. Will the business pay for a percentage of dependents’ health coverage? Depending on how many dependents the employee has and the type of business you own, this can be a critical decision that could make a major difference on what small business insurance plan you choose.

• Decision 3: What type of savings plan will you use? By having an HSA (Health Savings Account) or an HRA (Health Reimbursement Arrangement), these provide a great way to save money on health care costs and provides a way for employees to save up to cover those costs as well. Both HSAs and HRAs can help to lower your monthly premium costs, while still providing for employee coverage needs.

• Decision 4: Will you offer supplemental health benefits? The more appealing your company health plan, the more likely you’ll be an attractive employer. If you’re part of an intensely competitive labor market, you’ll want to offer more additional benefits to prospective employees. At the very least, it is wise to make supplemental health benefits available, even if you can’t furnish the cost for all of them. Having an HSA available as an alternative supplement to health benefits is a great move as a cost saving measure on premiums and to attract new employees as well.

There are plenty of decisions to make when considering health plans, and these are only a start. These key decisions are not ancillary to running a successful business. They are crucial due to the nature of hiring and retaining personnel. By making smart decisions about small business health plans now, you and your employees will definitely benefit in the long run.

The variety of choices you have when it comes to small business group health plans can make it difficult to make a decision. Royce Vangoff found some helpful information on group health care at RMHP that ultimately helped him make the decision.

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