If you’re looking to roll out healthcare benefits for your employees, you may be wondering about small business health insurance cost. Here are some answers.
More than half of small business owners are worried about the costs of health insurance. Health insurance costs have been on the rise for years now, and they show no signs of stopping.
Between the law and responsibility toward your employees, you want new healthcare benefits. Like other business owners, though, the cost is your major concern.
Just how much does small business health insurance actually cost? We’ll break down what you can expect to pay if you decide to invest in a new healthcare plan for your employees.
Why Should You Offer Health Insurance?
The first question you may have is why you should offer health insurance to your employees. There are a few good reasons.
First of all, you may be legally obligated to provide some sort of coverage for your employees. Most small businesses are exempt from offering coverage under the Affordable Care Act. If you have 50 full-time employees, you may need to make the employer shared responsibility payment.
Some businesses will also need to meet reporting requirements. Health insurance companies, for example, must report.
Beyond legal considerations, offering health insurance is a smart business move. Studies show employees who have good benefits are less likely to leave a company. Medical insurance, dental insurance, and vision care coverage are popular benefits.
Employees who know their employers care about them are more engaged and productive. They may also take fewer sick days. In short, when you offer good healthcare benefits to your employees, everyone wins.
What Does Small Business Health Insurance Cost?
The biggest drawback is the cost of small business health insurance. Even the most affordable healthcare package may seem too expensive for your budget.
So how much is business insurance of this variety?
On average, a small business can expect to pay around $540 per month or about $6,500 per year for single coverage. Family coverage clocked in around $17,500 for firms with fewer than 200 employees.
A Wide Variety of Factors Influencing Cost
Keep in mind the figures presented above are averages. Your company may pay much more or much less for health insurance, depending on a wide variety of factors.
Factors influencing the small business medical insurance cost include:
- The state you’re operating in
- The number of employees you cover
- The number of family coverage policies vs. single coverage policies
- The benefits you offer
- The insurance option you choose
Healthcare insurance costs vary from state to state. California, for example, has lower premiums than the most expensive state, New York.
The benefits you offer also influence costs. Offering $1 million in coverage for hospital stays costs more than offering $500,000. The same is true if you offer vision coverage along with medical and dental.
Different Health Insurance Options
Another factor influencing the cost of health insurance for small business is the plan itself. How you choose to offer it is another factor.
The Affordable Care Act introduced state-wide marketplaces for health insurance. In the marketplaces, plans must meet specific requirements. They’re divided into different tiers, known as Gold, Silver, and Bronze plans.
Small businesses aren’t required to provide healthcare benefits, but they can choose to do so. If you want to offer healthcare insurance, you can do so through the SHOP program. This allows you to enter the state marketplace.
Another option small business owners have is self-insurance. Generally, the business sets aside funds in a plan administered by a third party. The funds are then disbursed to employees who make claims.
The rules vary from state to state. Despite this, self-funding has some advantages for small businesses, such as:
- Lower costs
- Better financial control and cost management
- Greater flexibility and customization of benefits
The last point is particularly important. Whether you choose SHOP or a self-funded option, you want to offer the right benefits. What you offer to your employees in their benefits can also impact your costs.
Controlling the Costs of Health Insurance
There are several things a small business owner can do to control the costs of health insurance. One of them is choosing plans that don’t meet ACA requirements. Since you’re exempt from the ACA, you can choose lower-cost plans outside the marketplace.
As we already mentioned, choosing to self-insure can be a good way to control costs. Healthcare reimbursement arrangements (HRAs) are another good option for small businesses.
There are loopholes in the ACA and other laws. These are designed to make offering health insurance more affordable for employers. You may also ask your employees to take on part of the premiums as a way of covering costs.
What Should You Include in a Benefits Plan?
Knowing the health insurance for small business cost leaves you with other questions. What kinds of benefits you should include for your employees?
The most popular benefits are:
- Medical insurance
- Dental and vision care coverage
- Paid parental leaves
- Help with tuition and student loans
You might also want to consider other benefits as well. Many employees favor unlimited vacations, and many want to travel more. In that case, you might look into providing travel insurance.
Another popular benefit to offer is life insurance. Compared to health insurance, the average life insurance cost makes it an affordable option. Life insurance helps your employees protect their loved ones.
Pension plans are also popular options. You have many choices, so you can pick a plan that fits your business.
Get Ready to Improve Your Business
After reviewing what small business health insurance cost is, you may hesitate to add it. It’s still a great idea because health insurance can help you help your employees. Happier employees contribute more to a business.
There are also many ways you can find health insurance for a great value.
If you’re looking for other ways to fuel growth in your business, have a look around the blog. We have tons of tips and tricks that can help you build a better business. If you’re looking for inspiration, you’ll find all the motivation you need here.