There are a variety of reasons to offer some form of healthcare for the employees of your small business. Among those are to make employment with your business more attractive, to offer a competitive salary plus benefit package, or as a means for retention of your existing teams.

These are all excellent reasons to add in a healthcare benefit, however the mechanics of doing so are complicated and will likely require a healthcare manager along with some specialized software to handle the complexities of administrating the program.

In truth, there are three major areas that Small Business Managers must pay attention to in order to have a successful program. These are: costs and controlling premiums, administrative burden and lack of expertise, and limited coverage options and flexibility. Let’s take these one at a time and understand the implications of each of these areas.

Costs and premiums

• Small businesses usually have smaller budgets than larger corporations. So the proportionate cost of providing health benefits can be a significant financial strain right off the bat.
• Even if initial costs are affordable, annual increases can make it difficult to absorb these costs or pass them on to employees.

Administrative burden and inexperience

• Handling a health insurance program is complex: enrollment, claims processing, and employee support, can be challenging and resource-intensive for small businesses with limited time and resources.
• Most small businesses lack the internal knowledge and expertise to navigate the regulatory environment of health insurance. This can create errors and in the worst case, non-compliance.
• Understanding the ACA requirements, especially for employers with 50 or more full-time equivalent employees (FTE), adds another layer of complexity.

Limited flexibility and coverage options

• Group health plans have strict participation requirements, which can be difficult for smaller teams to meet.
• Many small business plans tend to be rigid in terms of coverage, potentially failing to meet the needs or preferences of their employees.
• Small businesses may find it difficult to offer a competitive benefits package compared to larger corporations. This works against their ability to attract and retain top talent.

All is not lost, however. There are organizations and experts who can help mitigate some of these difficulties making them more manageable. As discouraging as some of these requirements seem to be, even some simple solutions can help make your health care offerings look more attractive. Let’s take a look at some of these.

• Tax-Advantaged Health Insurance: These are intended to allow the employee to pay for health services through payroll deductions. Contributions are limited but reduce the tax liability by the contribution amount. Money put into this account can be invested. Withdrawals for qualified expenses are tax free and the savings accrue year after year. This is a general framework for Health Savings Accounts (HSAs) and there are many variations of these types of accounts. These include Health Reimbursement Arrangements (HRAs), Professional Employer Organizations (PEOs), and Association Health Plans (AHPs) which all offer flexibility and are cost-effective plans.
• Cost-Sharing: Employers can offer to cover part of the premiums, cap out-of-pocket expenses, cover some drugs in addition to employee contributions. Use of High-Deductible Health Plans (HDHPs) with HSAs is another way of controlling costs.
• Seek Expert Guidance: Employers should consult with insurance brokers, PEOs (Professional Employer Organizations), or other benefits specialists. They can help navigate the healthcare maze and put together a creative plan that meets your specific needs. Some professional organizations like the Writers Guild of America and Meeting Planners Unite, the Small Business Service Bureau and the Alliance for Affordable Services have consolidated their collective bargaining power to offer some limited healthcare options as well.

The good news in all of this is that there are a variety of options that can help make healthcare offerings by small businesses into a reasonable proposition. Carefully assess your needs, explore available options, and obtain expert guidance. Putting out the effort, even at the small business level can provide valuable healthcare benefits to employees, fostering employee satisfaction, and retention, and ultimately, business growth.

Small Business Resources welcomes questions from inquiring minds looking to improve their business outcomes using best business practices combined with available technologies. Submit any questions you would like us to explore on your behalf to contact@sbresources.com.