Do you have questions about small business medical insurance? It is most likely that you already know the importance of a competitive benefits package to recruit and retain top talent in a good job market. It is common sense that you want to keep these valuable team members loyal. Benefits and culture are also important for today’s employees. Compensation is the main factor in effective retention strategies, but it is not the only one. Discover your options for health benefits for small business.
What’s the good news? There are more options than you think!
Medical health insurance for small businesses
Small-group insurance has traditionally been the first option for many small employers when they need to provide health benefits for their employees. However, that’s no longer the case.
These plans, while widely known and understood by many people, are not the only option. There are THREE options! You can choose what works best for you based on your company’s size, the price of individual and group plans in your area, and how the local market is doing.
Look at each option briefly.
Small group insurance coverage
Small-group insurance, or fully-funded insurance, has been the primary option for many small employers to provide health benefits to their employees. In all states, it’s for companies with fewer than 50 full-time employees. Only four states allow companies to have up to 10 employees.
A group of people, usually employees or associates of an organization, can be covered by a health insurance plan. Members of group health plans usually get insurance at a lower price because the insurer’s risk is spread across a number of policyholders.
Plans that are self-funded
Some employers are self-funding to reduce costs. Self-insured companies pay claims directly out of their own pockets, rather than paying a premium up front to an insurance provider. Self-insured plans are typically used by large companies to control their healthcare costs and manage their own risk pool.
Prepare for reimbursement of well-being
A health reimbursement association (HRA) is a tax-advantaged alternative to traditional insurance policies. It allows employers to reimburse employees for their insurance premiums, and any medical expenses (if applicable), on a pretax basis.
HRA is a reimbursement association, as opposed to Health Financial Savings Accounts (HSAs), and Versatile Spending Accounts FSAs, which are accounts. The worker pays their insurance company or doctor’s office first, then submits a claim to be reimbursed tax-free.
Before, group plans were a great benefit to employers because they were deductible expenses. They had also been deducted from employee paychecks before taxes. Employers can reimburse employees without having to pay payroll tax, and employees don’t need to recognize earnings tax. Also, the reimbursements that are made by the company count as a tax deductibility.
HRA Sorts: The best way to take care of your small business’s well-being
Two types of HRAs allow small businesses to reimburse employees for health insurance without paying taxes. This is, in our humble opinion, one of the easiest ways to provide health care for small businesses.
QSEHRA: In order to cut through the insurance coverage jargon, a QSEHRA allows small employers (companies that have fewer than 50 FTEs), to set aside a fixed amount of money each month. This can be as much as $5300 per year for individuals and $10,700 in 2021 for families. Employees may use this to purchase individual medical insurance or to pay for medical bills tax-free.
ICHRA: The individual protection HRA offers all of the same benefits as QSEHRA but without any contribution limit and with no restriction on firm size. ICHRA has the flexibility to charge different rates based on family size and age, just like QSEHRA. But the most distinctive characteristic is the ability to scale benefits across completely different classes of employees. Employers can offer a different amount of reimbursement to seasonal workers, another to part-time employees and range amounts based on geographical area. This allows for a more efficient use of total profit. A group plan can also be integrated with an ICHRA, which is another difference.
Take Command can also be helpful!
If you have any questions about your company and how HRAs compare to group plans in your area, we’re ready to answer them on our website. Our team is here to help you if you need it.
If you want to learn more, here are some useful resources:
The best medical insurance options for corporates
What is the best place to start when it comes to medical health insurance for employees?
What is the value of medical health insurance?
The best way to get medical insurance for small business
