As a small business owner, finding affordable healthcare is probably high on the list of company concerns. On top of your own family's plan, you may have employees that want to be covered by company insurance. Companies with fewer than 30 employees pay an average of $409 per person for insurance premiums, according to a 2018 eHealth report. Still, over half of small businesses offer a group health insurance plan to try and attract and retain the best employees. Here are some things to consider before choosing your company's health care plan.
How much health insurance actually costs
You may be reeling from the sticker shock of health insurance premiums, but these premiums aren't the complete picture of how much health insurance will cost your business. The first thing to consider is cost-sharing. Are you planning to split the cost of insurance premiums with your employees? Forty percent of companies share the cost equally, according to eHealth.
Also, your company may qualify for small business tax credits. The Small Business Health Care Tax Credit may cover up to 50% of your employees' health insurance premiums. You may qualify if you have fewer than 25 full-time employees with an average salary of $50,000 or less.
You should also explore small business tax deductions. Your employees’ health insurance premiums are considered a deductible business expense. You can also deduct the contributions you make to your employees' health savings accounts (HSAs)—which can help them offset qualified out-of-pocket costs.
Even if you don’t provide a group health insurance plan, you may still offer a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)—a.k.a. a small business health reimbursement account. These plans allow you to help employees pay for their health care costs, including monthly insurance premiums. You can learn more about QSEHRAs here.
Where to shop for health insurance plans
When it comes to health insurance plans, small business owners have several options. If you prefer to do it yourself, you can start by calling a bunch of health insurance companies directly for quotes. This may be the most difficult and time-consuming option.
You may also shop for plans through the Small Business Health Options Program (SHOP), the government’s online exchange for small businesses. You can use the website to compare plans and prices, estimate how many full-time employees you have, and review tax credit information.
If you're looking for some extra guidance, SHOP offers a tool to connect with local insurance agents, brokers, and assistors by plugging in your zip code. Another way to narrow down your options is through trade or professional organizations. Depending on your industry—and your professional affiliations—you may have access to discounted group health insurance plans. You may have a lot more leverage with other small businesses than you would on your own.
Be proactive with health insurance
It may feel overwhelming to choose the right health insurance plan. After all, your decision may impact your family, employees, and prospective employees for years to come. But the sooner you begin, the more time you will have to compare plans, and the less confusing the selection process may be.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.