It’s that time of year when small businesses are looking at health benefits for 2014 and evaluating options. During this renewal season, small businesses are in an interesting position. Small businesses with fewer than 50 employees are not mandated by the Affordable Care Act (ACA) to offer traditional health insurance by 2015. As a result of the ACA there are new options for small businesses to afford health benefits – including small businesses who have been priced out of traditional group health insurance. These two factors create new alternatives, and opportunities, for small businesses and their health insurance brokers.
Here are the top three health insurance options small businesses are evaluating for 2015.
#1) Small Group Health Insurance Plan
The first on our list is the non-alternative – a small group health insurance plan. A small group health insurance plan is the traditional way for small businesses to offer health insurance, however there are new options for 2015.
With traditional small group health insurance plans there are certain requirements that make them somewhat prohibitive for some small businesses. For example, in Texas employers must contribute at least 50% of the premium amount and must have at least 75% enrolled.
Brokers can help the small business select and purchase a traditional small group health insurance plan.
#2) Defined Contribution Health Plan
The second option is an emerging small business health insurance alternative, and is a simple approach to offering employee health benefits. It is a viable option for small businesses because it removes many of the barriers of offering traditional health insurance (ex: cost, minimum participation, minimum contribution, etc.).
With a “pure” defined contribution health plan, the benefit the small business provides is health insurance allowances.
- Employer sets a contribution amount (i.e., $0, $25, $100 per month), this is applied to premium cost of the plan that the employee chooses
- The chosen broker can arrange a set of plan options from low cost minimal coverage to moderate cost and premium coverage. Then during your open enrollment, the broker can help your employees navigate the decision making process based on their individual needs.
If the small business would like to contribute to employee’s premium expenses, they can use a defined contribution health plan to cover a portion of the employees premium. And, the defined contribution allowances can be allocated by job criteria (e.g. $200/month to managers and $100/month to entry-level).
For many small businesses, a “pure” defined contribution health plan will be the most cost-effective solution because the small business can contribute any amount.
Brokers play an important role in defined contribution health plans and can help the employer make important decisions about the level of contribution made and how it is applied to the plan, whether in an HSA account or towards the premium or both.
#3) Offer Nothing
The last small business health insurance alternative is to offer nothing to employees. In other words, do not offer a formal health benefit.
Some small businesses are taking this approach because they cannot afford #1 (a small group health insurance plan) and they do not know that #2 (a defined contribution health plan) exists. Others do not want to contribute to employees health insurance expenses.
What now? You need to make your decision as a small employer.
As a small business leader or owner, you and your team must make an active decision. If your choice is to offer nothing, make an informed decision and then offer resources to your employees to help them find coverage. However, take a few minutes to find a broker, and pick up the phone and call them. They can provide insight on how this decision will affect your business specifically. If/when you decide to offer coverage, the insurance carrier pays the cost of the brokers services for small group coverage.
If you currently offer no coverage: There is no harm in exploring option #2. As an employer there is a very significant value behind offering health, vision, dental, life and other benefits and now you can do this with either no cost, or a stable and defined cost you choose.
If you currently offer coverage: Make sure your broker is helping you make the plan design decisions that can make your plan optimal for the needs of your employees. Employee populations vary by industry and the demographics should impact the offerings made to your employees.
The point being, do SOMETHING! This is a prime opportunity for small businesses.
Questions??? I am happy to answer them! Need a broker? I can help!
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