What’s the right insurance for my business? | A How to Decide Guide
For the majority of workers, employee-sponsored healthcare benefits are incredibly important. According to a Robert Half survey, 76% of respondents ranked healthcare benefits at the top of the list of essential benefits. However, health care benefits come at a cost. And according to the Kaiser Family Foundation, annual premiums for health insurance rose 4% in 2021.
Take Command understands that health plans can be confusing, expensive, and excellent benefit for your employees. This article will take you through the different options available to employers and help you decide which is the best fit for you and your employees.
Why offer an employer-sponsored health plan?
Employee benefits are not only popular, but they may be a legal requirement. The Affordable Care Act requires employers with 50 full-time employees or more to offer affordable health insurance. Even if employers don’t fall under the employee mandate, offering healthcare coverage is a good idea.
Recruit & Retain Talent
As we mentioned, health care is an important benefit to the majority of employees. A survey by AHIP shows that 46% of respondents said health insurance was either the deciding factor or a positive influence in choosing their current job. Meaning this is important tool for recruitment and could be the deciding factor if a recruit chooses your company or another.
But recruitment isn’t the only benefit. Savvy business owners know that keeping talent is a cost-effective and efficient way to operate a business.
The same survey showed that 56% of U.S. adults with employer-sponsored health benefits said that whether or not they like their health coverage is a key factor in deciding to stay at their current job.
If an employer is looking to keep their trained employees, it’s wise to invest in their healthcare.
Tax Advantages
Offering a health plan can be a tax advantage to your business, depending on the plan. The benefit dates back to the 1940s. The federal government changed the tax laws to allow business to provide health insurance coverage as part of an employee’s compensation package tax-free.
Healthier Employees
According to the CDC, employers are uniquely positioned to promote employees’ health and safety, with workers spending more than one-third of their day on the job. One strategy to influence health is offering health insurance.
By offering health insurance, employees are more likely to seek treatment and care, including preventative care, which may avoid more significant health issues in the future.
The CDC says a workplace health plan can increase productivity and reduce absenteeism. Both a tremendous cost benefit to employers.
Different Insurance Options for your Business
Health insurance is a complex area with lots of different options. We understand it can be nerve-racking and overwhelming to select a coverage that makes sense for your employees and isn’t going to break the bank. We’ll walk through the different options and provide some insight into what approach may be right for you and your employees.
Traditional Group Health Insurance
You may be the most familiar with traditional group health insurance. For years, a group health insurance plan was the cornerstone of an employee’s compensation benefits. Group health insurance are available to both small and large employers, the only qualifier being one full-time equivalent employee other than the business owner.
Group plans are attractive since members can get health insurance at a reduced rate because the insurance carrier’s risk is spread out across several policyholders. With these plans, insurers typically require a certain percentage of employees to participate. The business pays part of the premiums and the employer pays a part of the premium. Employers can purchase insurance through a private broker. Small employers, those with less than 50 employees, may be eligible to purchase coverage through Small Business Health Options Program (SHOP).
→ Check out our post on Group Health Insurance for Beginners to learn more about this option.
HRAs
HRAs or health reimbursement arrangements, is a health spending account owned by an employer. Employees pay for qualified health care expenses or individual health insurance premiums, and the employer reimburses them. This type of arrangement allows employers to offer healthcare benefits that best fit their employee’s needs and the company’s budget.
→ Check out our post on HRAs for Beginners
There are different kinds of HRAs. The most popular being the Individual Coverage HRA (ICHRA) and the Qualified Small Employer HRA (QSEHRA).
ICHRA: ICHRAs allow employers of all sizes to reimburse their employees for health insurance premiums purchased on the individual marketplace. This allows the employee to have choice over the type of coverage they need. There is no cap on annual contributions.
→ Check out our ICHRA Guide
QSEHRA: QSEHRAs are for small businesses and nonprofits with less than 50 full-time employees. It allows employers to reimburse their employees for qualified healthcare expenses. Healthcare expenses may include care specific costs outlined in by the IRS. It may also be used toward individual health insurance premiums.
→ Check out our QSEHRA Guide
While ICHRAs and QSEHRAs are some of the most popular types of HRAs, there are several other options. Read more about HRAs here.
What about Health Stipends?
An employer wanting to avoid administration and regulation headaches may be tempted to offer a stipend or an extra payment to their employees to cover some healthcare costs. While this may be possible for small employers, it is a taxable benefit. If you’re looking for a tax-free alternative, Take Command would point you to an HRA.
→ Read more about Health Stipends in Lieu of Health Insurance
How to decide on the right insurance for your business
The best choice for your company is highly personal and based on the unique makeup of your company and your employees. To help you with this decision, we’ve included a few questions in this post to help you work toward a solution.
Here’s what to ask.
Do you have a budget or stress about renewals?
For any business decision, it’s important to analyze the cost of the plans and risks associated with that cost. Costs will depend on the type of health benefits you choose to offer and administration effort.
Traditional group health insurance premiums typically go up year over year.
As mentioned at the top of this article, healthcare premiums rose 4% in 2021. The Kaiser Family Foundation conducted research that pointed to some reasons as to why premiums continue to rise.
The survey found that hospitals charge employers and private insurance companies an average of 2.5 times more for the same care than they do Medicare. With these inflated costs and the uncertainty of rising premiums it makes it difficult to plan financially for the future.
In addition to premium hikes, employers need to consider the cost for administrating health care coverage. This includes everything from plan selection to employee promotion and filing out forms.
An HRA may be the best way to control costs year over year. With an HRA, the employer sets the amount of dollars they will contribute. There are no surprise premium hikes and reduced chance that your employees will be overcharged.
For example, if an employer offers a QSEHRA – the plan offers reimbursement for qualified health care services. If an employee is billed for a health care service, they have the opportunity to negotiate and often are offered a discount for paying in cash. This means no overcharging for care and no unexpected premium hikes.
While there are administrative costs with an HRA, they are considerably less than a traditional plan. With Take Command’s platform, employers are able to streamline the design and implementation of your HRA.
→ Learn more about our HRA administration platform
Do you have employees in different states?
A multi-state workforce has many benefits including a wider talent pool; however, when it comes to health care coverage it may add another layer of complexity. Some states have different health care rules and regulations.
For group health insurance, it may be difficult to find an affordable national healthcare plan to cover employees across different states. It may require buying different plans from different health insurers.
With an ICHRA, an employer can utilize classes. Classes give the employer flexibility to offer different terms to different employees based on a set of rules laid out by the government. One of the classes includes geographical location which can be utilized to ensure that employees are getting health arrangement terms that fit their state’s guidelines.
→ Read up on ICHRA Class Rules
→ Learn how employers can contribute different amounts for different employee types
Do your employees like their current plan?
If the employees like their current plan, it may make sense to keep offering it. However, if an ICHRA makes better administrative and financial sense for the future, existing employees can be grandfathered into their existing traditional group plan while new hires may be enrolled into an ICHRA. This option may also depend on how strong the individual insurance market is your area.
Which option will keep your employees healthy?
By offering health benefits, employers are taking the first step to ensuring the health of their employees. However, you want to make sure you’re meeting the needs of the employees.
Just like their different personalities, each employee has different health care needs. With traditional group plans, the coverage options tend to be a one-size-fits-all, and the employee has very little say regarding what services are covered, networks, etc.
With an ICHRA or QSEHRA, employees are able to purchase a plan on the individual market that meets their needs. Depending on the individual insurance marketplace in their area, employees may have more options when it comes to choosing a plan that fits their individual health needs.
Still need help deciding on the best insurance for your business?
We get it.
This can be a little overwhelming.
Our team is here to help you make this important decision. We have a few resources to share with you to aid in your health benefits decision for your company.
→ Learn what’s shaping today’s employee benefits conversation
→ Comparing Group Plans and HRAs
→Can an employer reimburse employees for health insurance?
You can also chat with us in the bottom right hand corner of your screen or email support@takecommandhealth.com.
