Small businesses are the backbone of the American economy, employing over 58 million people nationwide. However, offering group health benefits to employees can be daunting for small business owners, as it requires navigating complex insurance options and managing costs. Here's the thing: providing access to healthcare is crucial for attracting and retaining top talent. As a result, small business owners need to design a health benefits package that balances cost and coverage. Here's how to create the ideal small business group health benefits package.
Medical insurance options for small businesses
The most critical component of a group health benefits package is medical insurance. Small businesses can choose between traditional fee-for-service plans, health maintenance organizations (HMOs), preferred provider organizations (PPOs), and high-deductible health plans (HDHPs). Each of these plans has its benefits and drawbacks, so small businesses should carefully evaluate their options to determine which plan suits their employees' needs best. Many variables go into play regarding which plan to offer your employees such as the demographic makeup of your employees, the size of your company and the network(s) your local providers are a part of.
Stand alone dental and vision coverage
Many medical insurance plans do not include dental and vision coverage. However, these benefits are essential for employees' overall health and well-being. Small businesses can offer stand-alone dental and vision insurance plans or include them as part of their medical insurance plan. Most Dental and Vision plans are low-cost and can add substantial value to your employees as an employer.
Wellness Programs for small businesses
A wellness program is an excellent way to encourage employees to adopt healthy lifestyles and reduce healthcare costs. Small businesses can offer wellness programs that include health screenings, fitness classes, nutrition education, and smoking cessation programs. Programs that prioritize mental health needs have also become popular in recent years. These programs can help employees stay healthy and reduce healthcare costs for both the employer and employee.
Disability insurance
Small businesses can offer disability and life insurance to provide employees with financial protection in case of an unexpected illness or injury. Disability insurance can provide employees with income replacement if they are unable to work due to a qualifying disability. The most common type of disability insurance offered by small businesses is short-term disability. This plan is a low-cost option that can help pay a portion of an employee’s pay (60%) while they are on short-term leave. Most small businesses do not qualify for FMLA so offering a paid disability plan is an added value to employees.
Life insurance
There are two forms of life insurance that can be offered by employers; group life and voluntary life. Group life insurance is typically an employer-paid life insurance plan that is often coupled with accidental death and dismemberment (AD&D) plans that are low-cost options available to all eligible employees. Typically, these eligible employees are automatically enrolled into this plan being that it is 100% paid by the employer.
A voluntary life plan is a supplemental term life insurance plan that is available for employees to elect for employee, spouse or child. Typically, if an employee wants to elect a spouse or child life, they must first be enrolled in employee life insurance. Most voluntary life insurance has a guaranteed issue amount which means that an employee can elect up to a certain amount of life insurance without having to provide proof of good health. Anything above this limit will require additional paperwork from the employee and their primary care physician.
Health Savings Accounts
Health Savings Accounts (HSAs) allow employees to set aside pre-tax dollars to pay for eligible medical expenses. These expenses can include deductibles, copays, and prescription drugs. HSAs are an excellent way to help employees save money on healthcare costs while reducing their taxable income. HSAs are only available if you offer a high-deductible health plan to your employees. Note that employees can still enroll in an HSA plan on their own if you, as an employer, do not offer one as long as they are enrolled in a high-deductible health plan. It is easier for an employee to enroll if their employer offers an HSA option, and their payroll system can send contributions to the HSA provider.
Health savings accounts provide a triple tax advantage. First, HSA contributions from employees are tax-free which lowers their overall taxable income for the tax year. Second, money that is in an HSA account accrues interest that is also tax-free. Finally, an HSA can be used for all eligible expenses on a tax-free basis.
Employee Assistance Programs
Employee assistance programs (EAPs) provide confidential support to employees struggling with personal or work-related problems. EAPs can offer counseling, financial advice, legal services, and other resources to help employees navigate difficult situations. These programs can improve employee morale, productivity, and overall well-being.
Your benefits package may look similar to other small businesses. Still, we know that budget, workplace demographic, and company size can all impact the precise plans you might want to implement. Whirks Benefits Services offers step-by-step consultative guidance to any employer looking to add insurance for their group. Check out our article about flexible benefits plans & how to stay compliant with a POP Doc to learn more.
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