In my last post, I talked about why a small business should consider getting health insurance for their employees. Of course, it’s one thing to see the merits in an idea and another to put it into practice. So if you decide to explore health insurance benefits for your small business employees, there are several options to keep in mind and points to consider. Many large employers cover a percentage of each employee’s health plan–this is not a feasible avenue for the smaller employers because the cost is variable and unpredictable. The best practice for us small businesses is to cover a flat dollar amount of each employee’s health insurance. This way, the amount is fixed unless you decide to increase it.
Contracting with a Professional Employer Organization (PEO) allows you and your employees access to plans that are generally not available to the individual market and is purchased with pre-tax dollars.
Though signing with a PEO can be pricey, the cost should be weighed against the benefits of access to premium health plans. The PEO will administer your open enrollment for benefits, as well as your payroll and HR needs. The convenience factor of having your HR outsourced cannot be underestimated for a small business. HR compliance is simplified for you because the PEO HR experts take over. Competition in the PEO space is stiff with big companies like Tri-Net, Insperity, and ADP, as well as more regional players like HR-Strategies.
If the PEO route is not right for your company, you can still contribute a flat dollar amount to each employee to cover a portion of the individual’s health insurance plan selected from a broker. This contribution, however, will be subject to payroll taxes. I would also encourage you to explore Bernard Health, a newer venture that helps you and your employees select and pay for your plan at no additional cost.
The health insurance industry has undergone monumental changes since the passage of the Affordable Care Act (ACA). The disruption will continue as more and more of the ACA requirements come into place. Don’t stay puzzled–seek out knowledgeable help from PEOs, brokers, or services like Bernard Health.