Thinking about offering healthcare benefits this year? Here are some things to consider.
Here's what you need to know:
- Businesses of different sizes must meet different requirements around offering healthcare benefits
- There’s a difference between group and individual plans
- Employers can decide how much of the cost to bear for employee health premiums
Nearly a year into the global pandemic, small businesses continue to contemplate their role and ability to offer healthcare benefits to their employees.
Even if the pandemic isn’t the reason you’re considering offering health benefits, and it’s something you’ve been planning to look into for some time, it can be daunting to research and select a plan, and expensive to offer — which is the reason many businesses put it off.
There is no one-size-fits-all solution for every small that wants to offer health benefits, since every business’s needs, abilities, and employees are different. Even so, there are a few central things to consider when making a decision for your small business.
Here are a few key considerations to think about as you weigh the options.
There is no one-size-fits-all solution for every small that wants to offer health benefits, since every business’s needs, abilities, and employees are different.
Are you required to offer health insurance?
Due to the Affordable Care Act (ACA), all businesses that are considered large employers (those with 50 or more employees) are required to offer health insurance to employees — and not just any health insurance, but insurance that is affordable according to certain metrics. It’s important to note that some states have different classifications regarding the number of employees that make a business a large employer, so be sure to check state and local laws, too.
Understanding individual vs. group plans
Individual insurances are more or less what the name implies: individual plans that people buy directly from exchanges like HealthCare.gov or similar state-based markets.
Group-based plans are those offered by a company directly to its employees. For the purposes of this article, this is what we’ll be talking about from this point forward since a group plan is what you’ll be offering to your employees should you choose to offer health insurance.
Factoring in all the costs
For businesses not regulated by the ACA (sometimes known as Obamacare), employers have the option to cover:
- All of the cost of employee premiums
- Part of them and require workers cover the rest, or
- None of the costs at all
However, some states require businesses to pay a certain portion of their employees’ premiums. Some insurance carriers require this as well, so that’s something to keep in mind as you shop around. If you choose (or have to) to subsidize plans for your workers, there’s a cost to offering health insurance that you’ll certainly have to factor into your decision.
That said, if you have 24 employees or fewer and choose to offer health insurance, you might actually get money back from the government. The ACA carves out a small business healthcare tax credit for exactly this purpose. In order to qualify, you must purchase your plan through HealthCare.gov’s SHOP program, the average salary must be $50,000 or less, and you have to pay at least half of the cost of premiums for all employees.
If cost is prohibitive, don’t worry. While it might seem like there’s little to offer when it comes to a group plan without covering any of the costs, there actually are benefits to it. Because you’d bring a whole group of people to an insurer, your business is likely able to offer better and/or more affordable plans than the individual market can.
There are many available options for coverage for you and your employees. Third-party providers are one — they can offer a variety of options from different carriers that let you comparison shop. In addition, they often provide helpful administrative assistance. For example, Zenefits simplifies benefits for small businesses by creating an easy-to-use, transparent, affordable, and modern experience. On Zenefits’ Health Plan Shopping platform, leaders can have transparency around pricing and identify the true cost of health plans.
Consider the benefits of offering health insurance
While it may seem like cost is the driving factor, it’s important to consider the competitive edge that offering healthcare insurance gives employers — especially if your competitors don’t offer these benefits.
When figuring out where the money to offer health insurance is going to come from, consider allocating some from your hiring and retention budget since benefits like these play a huge factor in getting talented applicants to decide to accept an offer.
When figuring out where the money to offer health insurance is going to come from, consider allocating some from your hiring and retention budget since benefits like these play a huge factor in getting talented applicants to decide to accept an offer. A 2018 survey found that 46% of employees surveyed said that health insurance influenced their decision to work for a given company. Further, 78% of those employees said that it was a factor in their decision to stay at their current job as well.
At the end of the day, it’s all about what makes the most sense for you and your employees and what’s possible within the boundaries of your organization.
The good news is that, as long as you enroll 70% of your full-time employees, your business can enroll in a health insurance plan at any time during the year. Even without hitting the 70% caveat, you can still enroll in a plan between November 15 and December 15 (the yearly Special Enrollment Period) when the 70% requirement is waived.