Small businesses have a tendency to pay more for health insurance. Because small businesses simply don’t have the negotiating power of large enterprises with 1,000 or 10,000 employees, they often need to pay larger insurance premiums, get reduced insurance packages, or pass more of the cost of insurance on to their employees. Companies that specialize in small group health insurance can help small business owners and HR managers find the insurance plans that can cover them — without an exorbitant cost.
What is Small Group Health Insurance?
“Small group” health insurance is insurance ranging from 2 to 50 employees. It includes basic health insurance as well as supplemental insurance — disability, critical illness, dental, and accident. Many small businesses offer small group health insurance as a part of their comprehensive benefits package.
Traditionally, small group health insurance is substantially more expensive than large group insurance. Small groups don’t qualify for the cheaper plans that companies with 100 or more full-time employees can get. This means that companies need to be a little more conscientious and critical when they’re figuring out which insurance plans they should purchase.
Why Offer Small Group Health Insurance?
Small businesses aren’t required by law to provide health insurance. In fact, no company is — but companies with more than 50 full-time employees will incur a significant tax penalty if they don’t insure their employees. Small businesses don’t incur this penalty. Providing small group health insurance is entirely optional.
So why do many small businesses provide small group health insurance?
First, for smaller businesses or “micro-businesses” with 2 to 10 employees, the owners and operators of the company can usually save money on their own insurance by lumping it into a larger insurance package. This benefits everyone, as even though small group health insurance is more expensive than large group health insurance, it’s still cheaper than any individual plan.
Second, small businesses are far more competitive with large businesses when they offer comprehensive health insurance. Often, employees are even willing to forego larger salaries as long as they have good insurance options. Insurance is something that everyone needs and that delivers considerable peace-of-mind.
Finally, employers who care for the health of their employees have happier, healthier, and more productive employees. When employees don’t have the appropriate healthcare, they can’t take care of themselves. Not only do small businesses care about their employees, but it’s simply better from a productivity and efficiency standpoint for everyone to be operating at their best. Realistically, the productivity of even a single employee matter, even more, when there are only a few dozen employees.
Small businesses can pass the cost of incidentals such as dental insurance or vision care onto their employees. But they may not want to if they’re trying to offer a competitive benefits package. Either way, there are many advantages to providing healthcare.
How Can You Save Money on Small Group Health Insurance?
Most companies are going to do better if they have small group health insurance. But realistically, the costs are substantial and many would rather avoid them if they could.
There are a number of ways business owners can save money on their small group health insurance policies:
- Consider HSA plans. HSA-compatible plans are essentially catastrophic coverage plans (low coverage plans) that are compatible with a Health Savings Account. An HSA allows employees to set aside a certain amount of their paycheck tax-free and then use that for medical expenses, thereby significantly reducing their medical expenses. For employees who have sporadic medical costs, an HSA is usually better. Educate employees on their options.
- Get multiple quotes. Like anything, getting multiple quotes is important when comparing insurance costs. But you also need to make sure you’re making an apples-to-apples comparison. Make sure that each insurance policy you’re comparing has equal amounts of coverage. Otherwise, the more affordable options may leave your employees adrift if they end up with more substantial medical costs.
- Set up FSAs for employees. FSAs are Flexible Spending Accounts. They are accounts that employees can use for their medical spending and get to spend that money tax-free. An FSA is essentially the same thing as an HSA, but an HSA is controlled by the employee and an FSA is controlled by the employer. Either one might be good for your employees, depending on your business situation and the plans available to you.
- Find companies that offer virtual care. Today, health insurance companies that offer virtual care options are rapidly becoming a cheaper and more effective option. Virtual care has gotten much better over time, and it makes it possible for employees to get the care they need without having to go into a medical office (potentially exposing themselves and others to illness). Plus, the reduced overhead means that virtual care companies are much cheaper.
- Offer your employees options. Not every employee may want a bells-and-whistles insurance plan. You can consider offering a regular, basic plan and then giving your employees the option of extending that plan with additional coverage. This allows your employees to create a custom plan that works for them, rather than you paying more for a one-size-fits-all solution. Consult with employees regarding the options they want.
Does your business offer small group health insurance? Are you looking for your first policy or a replacement policy? Offering small group health insurance is a great way to keep your business competitive and to keep your employees happy — and it doesn’t have to cost an arm and a leg.
Contact us today for more information about saving on your small group business rates.
