When you own a small business figuring out how to get comprehensive and affordable health insurance can be a tricky situation to navigate. Health insurance is not something that can be swept under the rug. Minor medical bills can really start to pile up without insurance. How do small business owners get health insurance? Even small businesses have options when it comes to providing quality health care for themselves and their employees. This is your comprehensive guide when it comes to finding health insurance for your small business.
Does My Small Business Even Need Health Insurance?
It may have crossed your mind that your business is so small that you do not need to offer health insurance through your business or the cost of offering health insurance is too expensive. What’s the right answer?
The short answer is yes, your small business should offer health insurance. Not only is health insurance important for covering unexpected expenses such as dental and chiropractic services, but it enhances the morale of your business. Small businesses who offer employee health benefits attract candidates who are better qualified and have a higher rate of employee retention. These days, the health benefits offered by employers can be just as important as the hiring salary. Offering health insurance doesn’t just benefit your employees, but will also benefit you, the owner, as you will partake in the same health care plan as your employees, as opposed to paying for private insurance or paying for medical expenses out-of-pocket.
Now, that you know why you need health insurance, how do small business owners obtain coverage for health expenses? They can either choose between traditional small group insurance plans or a non-traditional alternative, health spending account. Let’s take a look at both options.
Incorporate a Health Spending Account
A health spending account (HSA) is a popular option among small businesses because it allows the employer to customize the plan and control the costs. An HSA is not considered traditional insurance but rather is either an alternative to or an add-on to high-deductible insurance plans. Employees are able to take advantage of the ease of use and flexibility that an HSA offers. An HSA is an account in which money is put aside pre-tax for approved medical expenses. One of the big draws to HSA’s is that there are no premiums.
Both the employer and the employee contribute to the HSA. Each employee has an individual account, so their contributions are specifically for their account. When a medical expense is incurred, the employee will file a claim, the approved expense will be deducted from the employee’s HSA and reimbursed to the employee, tax-free. Each business is different, and for this reason, the employer will determine the amount of contributions and benefits offered. Another attractive quality of an HSA is this is an inclusive plan, meaning that most medical expenses are covered.
How Do I Know If My Business Qualifies for an HSA?
The good news is that qualifying for an HSA is straightforward. If you own a business that pays income taxes, then your business qualifies for an HSA. Your small business can even qualify for participation in an HSA if you are the owner and your only employee is your spouse. HSAs are a great option for even the smallest of businesses.
Small Group Insurance Plans
Small business owners often run into problems finding insurance companies that will cover their business because the number of employees is not large enough to meet minimum plan requirements. Small group insurance plans are traditional insurance that is a viable option for small businesses. They are designed for small businesses that do not have a large staff. The medical expenses covered are dependent on the specific plan chosen by the employer. The employer chooses who pays the premium.
There are three choices when it comes to payment of the premium. The first option is that the employer can pay the entire premium. The second option is for the employee to pay the premium pre-tax. The third option is that the employer pays a portion of the premium and the employee pays the remainder. The portion of the premium paid by the employee (if any) is typically deducted from the employee’s paycheck both before taxes are taken out and the employee receives their pay. This means employees do not have to worry about handling the payment of their premium.
What About Add-Ons?
Many small businesses can offer employees add ons to their individual health insurance plans at their expense if they choose to partake. Popular add-ons include life insurance and critical illness insurance. In some cases, dental and vision are adds-on. It depends on what is covered by the plan. This gives employees the choice in choosing the level of coverage their family needs without spending money on benefits they do not deem necessary for their current situation.
Does Your Small Business Really Need Health Insurance if You’re the Only Employee?
If you are the owner and sole employee of your business or if it is just you and your spouse owning and operating the business, do you really need health insurance through your business? Even though you only need health insurance for your family, it is still advantageous for your small business to provide health insurance.
Having health insurance through your business will save you a great deal of money in the long run. For starters, having company-provided insurance means premiums and claims are paid pre-tax which means you aren’t taxed on the premiums you pay for your business’s health insurance. Secondly, carrying health insurance through your business means you don’t have to pay for covered medical expenses out of your personal bank account.
Having the Right Team in Your Corner
Navigating the water of finding health insurance for your small business can seem daunting. The team at BP Group Solutions understands small businesses and the plights they face when it comes to obtaining benefits for themselves as well as their employees. With over 23 years of financial experience under their belt, they can help you find solutions that fit your business’s needs. Contact BP Group Solutions today for more information or to book an appointment with one of our experienced financial advisors!