Health insurance is a huge cost of business for any company, but especially for small companies. As a small business ourselves, we understand how stressful it can be to provide coverage to your employees. Premiums continue to increase and many smaller firms are forced to require employees to shoulder the financial burden.
Many employers have been forced to eliminate medical coverage all together. Over 60% of those without health insurance are employed by small businesses. This is a pervasive problem in the United States. The costs are greater per employee for a smaller company than they are for a larger one; some authorities cite a difference of 18 percent.
As a small business owner, what can you do to mitigate this issue?
While there aren’t any complete solutions, here are several ideas that can help to reduce the cost of providing medical coverage in your small business:
- Keep your employees healthy. Offering a wellness program can be very effective. Investments like flu shots, stop-smoking groups, cancer screenings, and more have been shown to return as much as $4 for every $1 invested. In the long-term, some larger companies have claimed a total savings of over $700 million from their wellness program!
- Most of these types of programs aren’t going to be free, but can be an excellent tool for some small businesses.
- Reduce the coverage. Though this option is unpopular with employees, reducing the amount of the coverage or requiring employees to pay a greater share of the premium may be necessary.
- Talk to your employees. Maybe they’re willing to give up dental or vision insurance in exchange for keeping the cost to them the same. See if a compromise can be reached.
- Health savings accounts. These accounts are available to those in plans with relatively high deductibles. In a nutshell, these accounts allow workers to deposit earnings in an account that can then be used to pay for medical expenses. Contributions and withdrawals are both tax-free. Employers can also make tax-free contributions, but are not required to.
- The deductions can even be made on a 1040 form without having to itemize.
- Join or start a group. Insurance premiums for businesses with over 25 employees are less than for those with fewer than 25. Essentially, the more people the better. Depending on state laws, it may be possible to join with other businesses and get a lower rate. The savings can be significant depending on the group size.
- Shop for the best policy. Different insurers will have different offerings. Look around and see what you can find. A new insurance company might be just what you need to find the perfect policy for your employees. Talk to other small business owners and see what coverage they offer their employees. Live in the Florida area? We have a great recommendation for you, our own JULO alum, Carrie Roberts with American Trustee of Florida, LLC.
While offering medical insurance is very expensive, if you can find a way to provide this at an affordable rate to your employees, employee retention will improve. You’ll also be able to attract better talent.
One of the most powerful things you can do to obtain affordable health insurance is to pool your resources with other small business owners and qualify for a larger-group rate. In some cases, you’ll save $100 or more per employee. Investigate your state laws to see what’s permitted.
Medical insurance isn’t an easy issue for small business owners, but you can usually find a solution with a little searching. Take good care of yourself, your business, and your employees; see what you can do to offer affordable healthcare to your workers.
ALICE DEGEORGE
PATRICIA (TRISH) MURPHY