health insurance benefits

As business owners and employers in the current job market, finding and keeping great employees is a bigger challenge than ever. Trying to be competitive as an employer requires a certain degree of flexibility and innovation, especially if your budget only allows for so much in terms of salaries.

Health Insurance Benefits as Employee Perks

A recent article in Forbes magazine underscores this approach,

Smaller businesses can remain competitive in the talent marketplace by thoughtfully packaging medical, ancillary (extra medical services like dental or vision) and wellness benefits into plans that appeal to the needs of current and future employees. While this might seem like a daunting task, professionals in this space regularly guide employers to options that will meet their financial needs while also addressing employees’ (and their dependents’) wants.”

Some of the ways an employer can accomplish this is by incorporating some of the following top health benefit suggestions:

Traditional Group Health Insurance Plans

Since this represents the traditional choice of most businesses, it is not actually all that innovative. However, a good group health insurance policy plan chosen can provide coverage to both employees the employees’ dependents.

Typically, small businesses will pay a fixed premium for the policy and often require that a portion of the premium be paid by employees. Employees are also responsible for any copays and deductibles required from health care visits.

While a traditional group health insurance plan can be a good choice for small businesses since it is easy to get and it’s a familiar structure for most employees, it is costly.

In fact, according to data in Mercer’s National Survey on Benefit Trends, the cost for traditional group health insurance per employee family is estimated to exceed $13, 000 annually in 2019. And this is for businesses with fewer than 500 employees, which means it is often more than many small businesses can afford.

Group Coverage HRAs and QSEHRAs

As a result of the high costs of traditional plans, high deductible health plans, or HDHPs, are offered more often because of the lower cost. But the lower cost also means less coverage for employees. And that’s where an HRA or QSEHRA can come in.

Small businesses can offer a group coverage health reimbursement arrangement to help compensate for any shortages in coverage. 

A group coverage HRA allows a business to provide employees a monthly allowance of non-taxable money in addition to their group policy. Employees can use this fund to pay out-of-pocket health care costs for which the employer reimburses them up to their allowance amount.

These out-of-pocket costs are often copays, deductibles, and prescription medications. 

Businesses can structure their own employee eligibility requirements as long as employees participate in the group policy. However, these HRAs must be attached to a group policy, which is still expensive and can be tiresome to administer.

Similar to the more traditional HRA is the QSEHRA.

Known as “Qualified small employer health reimbursement arrangements” QSEHRAs were created by Congress in December 2016.

Benefits automation software firm PeopleKeep explains,

“With the QSEHRA, much like other health reimbursement arrangements (HRAs), businesses with fewer than 50 employees offer employees a monthly allowance of tax-free money. Employees then choose and pay for health care, potentially including personal insurance policies, and the business reimburses them up to their allowance amount. This allows businesses to keep control over their budget while offering a meaningful benefit to their employees.”

Self-Funded Health Insurance

To avoid the expensive premiums and restrictions of group health insurance, some small businesses choose to self-insure.

How does this work? According to the HCAA website,

“A Self-Funded, or Self-Insured plan, is one in which the employer assumes the financial risk for providing health care benefits to its employees. In practical terms, Self-Insured employers pay for claims out-of-pocket as they are presented instead of paying a pre-determined premium to an insurance carrier for a Fully Insured plan. Typically, a self-insured employer will set up a special trust fund to earmark money (corporate and employee contributions) to pay incurred claims.”

Third-party administrators (TPAs) are typically employed to manage and process claims and other filings.

While a small business (and their employees) can save money with self-funded health insurance, self-insurance is risky. Catastrophic medical bills could quickly cripple a small business financially, which is why the average size of businesses that a self-funded business is 300 to 400 employees.

Great Employee Benefits are Good for Employers

Statistics show that business owners who can offer competitive salaries with great benefits offerings are more successful at attracting job applicants. A recent workforce survey found that over 15 percent of workers said they had left a job or turned down a job in the prior 12 months because of the lack of good benefits. Another 60 percent of those surveyed said they would take a cut in pay for a job with better benefits.

Benefits, but not just monetary rewards, are a great way for employers to demonstrate that they truly care for and value employees. This is especially true in the realm of health and wellness.

As another article in Forbes points out,

“Workplace wellness initiatives do more than just promote healthy habits. They show employees that their employers truly care about their health and well-being. All employees have the desire to be treated as human beings with human needs – not robots. The 2018 Global Talent Trends survey found that one in two employees would like to see a greater focus on well-being at their company. This includes an emphasis on physical, psychological and financial wellness.”

Health and wellness programs for employees benefit both the company and the staff. According to information from the federal government’s Office of Disease Prevention and Health Promotion (ODPHP), there are measurable benefits to be had by offering a robust health and wellness program:

1. Healthy, active employees incur lower health costs

Lower health costs benefit both the employer and the employee. If health costs are lower, employers may pass a smaller percentage of the bill on to workers

2. Employees who take advantage of wellness are more productive

One study found employees who participated in a health promotion program and improved their health care or lifestyle regained an average of 10.3 hours in additional productivity annually and saved their companies an average of $353 per person per year in productivity costs compared to non-participants

3. Physically active employees are healthier

Employee wellness programs that encourage physical activity can improve the overall health and wellbeing of the workforce. A study released in a 2012 issue of The Lancet found that physical inactivity has become more deadly – and more costly – than smoking.

4. Wellness programs inspire important behavior changes

Making lasting changes to behaviors is challenging for many Americans, but a comprehensive research report sponsored by the federal government workplace wellness programs can provide a much needed assist.”

No matter how long you’ve been in business, or how small your business may be, the advantages of offering top health benefits far outweigh the risks or costs. Attracting, finding, hiring and keeping good employees is expensive, time consuming and commands many resources. Having to do so as infrequently as possible is a cost-effective alternative.