The Affordable Care Act’s future landscape continues to remain unclear. For employers, this can make selecting a healthcare plan a needless (and confusing) pain. Thankfully, if you run a small business, your options are clearer, albeit slightly more limited.
Costs can be particularly prohibitive for small businesses when it comes to choosing a healthcare plan. In fact, half of small businesses today do not offer traditional healthcare coverage. For this reason, we’ve put together some of the most accessible and cost-effective health insurance plans for small businesses.
Here are the main options you have for small group health insurance this year.
1. Allow Employees to Purchase Individual Health Insurance Plans
One of the simplest options you have is to allow your employees to choose their own individual coverages. You can have them do this through either a broker or the public health insurance Marketplace. This means that employees will have their own choice of policy and carrier. They may also have access to premium discounts through the individual tax insurance credits, depending on the specific employee.
As the employer, you can choose to contribute to your employee’s healthcare plans through a Health Reimbursement Arrangement. This allows employees to be reimbursed tax-free for certain medical expenses, as long as they fall under a predetermined dollar amount each year. They can even roll unused amounts over into the next year(s). These types of accounts are owned and funded by you, the employer.
The most cost-effective way to implement these accounts for small groups is to allocate the allowances to family status. The small group can contribute any amount that falls under the federally defined limitations.
You can also involve a broker to help setup the HRA, sell employees their individual policies, and act as the small group’s healthcare consultant.
If your business is:
- not eligible for group health insurance
- priced out of group health insurance coverage
- can’t take on a group health insurance plan for administrative reasons
- you would like to start offering benefits for the first time
this might be the right option for you.
2. Private Health Exchange
You may also choose to go with a private health exchange to provide healthcare for your employees. This entails a defined contribution strategy in which employees are given a set contribution that they then use towards a selection of plan options.
You can work with a broker to find private exchange options and work with a private exchange provider or defined contributions. Startups have even been created for the purpose of offering new private health exchanges. Even bigger companies like Walgreens have been adopting this approach.
3. Join a Co-Op
A more traditional approach for small groups is to join a co-op for health insurance. Much like joining a co-op for a living situation, you can spread out the risk to a larger group and increase your buying power. No two co-ops have the same structure so the best rates for your business will depend on the specific co-op you’re looking into. The insurance rates offered by the co-op will also depend on your specific region’s insurance underwriting laws.
Cooperative insurance is not for everyone however it offers some very strong advantages. While having to agree on the needs of the group with other firms, it allows you all to think and act like larger companies. These cost savings will help from a recruiting and retention standpoint. It also will save your firm vital capital that can be put toward other internal functions. Functions such as additional benefits, improving of internal systems and bringing on additional headcount will make life better for all of your employees. It will also make your firm a more healthy one.
4. Shop Marketplace
These Marketplaces are federally- and state-run exchanges, in which small group health insurance plans are sold. If you have 50 or fewer employees and can meet certain requirements, they can be a great coverage option.
Eligible small groups are given access to exclusive small business tax croedits through the SHOP Marketplace. Small groups can also elect to go through a Marketplace-registered broker to purchase a selected plan. Take note, though, that SHOP Marketplace options are often quite limited, with some states only having a plan or two to select from.
5. Private Small Group Plan
Finally, small groups still have the option to purchase a private plan. There may be even more carriers to choose from and plan options available on the private market than in the SHOP Marketplace.