One of the best ways for small businesses to compete with large companies when it comes to attracting top talent is to offer high quality company health insurance. Great benefits are also highly effective at improving employee retention, which saves small businesses a lot of time and even more money. Choosing a health insurance plan for your small business is one of the most important (and sometimes most confusing) aspects of a benefit package. Never fear- the Funding Gates blog is here!
The best way to determine what company health insurance plan might be best for your employees, is to ask them. Consider holding a health care meeting or talking to them individually about what they are looking for in a health insurance plan. This will allow you to compare their needs with the amount your business can spend. Remember, you shouldn’t pressure them into specifics. Your meeting would be to discuss more general concepts, like whether or not most people need coverage for dependents and the price points for premiums they might be comfortable with.
Pay attention to these essentials when choosing a plan for your small business.
1. Flexibility. Your employees’ health care requirements will differ, so make sure the plan you choose will be able to cover a variety of needs. Some employees may need great drug coverage, whereas some will only need protection in the case of a major medical emergency. The plan you choose should anticipate these differences.
Take into consideration, too, the fact that employees will want flexibility in choosing their health care providers. Depending on how important this is to your employees, you may want to choose a PPO (preferred provider organization) rather than an HMO (health maintenance organization). This offers greater flexibility but can cost more on a monthly basis.
If possible, give your employees a choice about the plan and/or network they enroll in.
2. Tax Advantages. Major medical plans meet the “minimum essential coverage” requirements that will exempt your employees from paying a tax penalty.
Additionally, look at whether or not to provide other tax-saving opportunities for your employees like Health Savings Accounts, Flexible Spending Accounts, or Health Reimbursement Accounts.
3. Affordability. The plan will need to be affordable both by your employees and by your business. Balance the cost of the monthly premium against the out-of-pocket costs your employees will be facing.
Keep in mind the potential savings with your employee base. If none of your employees have dependents, for example, that might be an area where you can save on premiums.
Many small businesses pay for 50% of the monthly premium, but covering the entire premium will make your benefit package more competitive.
4. Add-ons. Coverage for maternity, vision, and dental are possible insurance riders that you’ll need to decide to add (or not). Different providers offer deals on these additional coverages, so once again you will need to determine how important this coverage is for your employees and who will pay the additional premium.
5. Internal Policies . Are you going to supply health insurance for all new employees right away? After a 3-month waiting period? Waiting a set time period can save you money on premiums if the employee is not going to remain with your business over the long term, but again, it might make the job offer less desirable.
Put these policies in writing, and make sure that all new hires are aware of the policies before they accept the job. If you have the approval of your employees, you’ve picked the right plan.