Small Business 101: Employer Health Insurance Coverage Tips

One of the benefits that employees value the most is health insurance coverage. Unfortunately, for many small businesses, the cost of health insurance initially puts it out of reach. If you are beginning to consider health insurance coverage options for your small business's employees or are looking for ways to help your employees with health costs, here are a few factors to consider.

Offer incentives for healthy behavior. Even if your small business can't afford health insurance, it may be able to provide incentives for healthy behavior. For example, you could provide free health club memberships or pay for smoking cessation products. Healthier employees could mean fewer sick days, which may actually save your company money.

Survey your employees. Before considering small business health insurance coverage of any kind, find out what your employees want. For example, if the only policy you can afford has such high deductibles, co-pays and shared expenses that it would not be a viable financial option for most of your employees, then it may be a waste of money to offer it.

Explore your options for group health insurance coverage. You may be able to obtain an affordable group health insurance policy for your business by joining with other small businesses. Check with small business organizations in your area, talk to other small business owners and/or contact industry associations for information on group health insurance coverage.

Do your homework before choosing a business health insurance plan. Compare coverage and premiums for a variety of plans, deal only with licensed insurance agents, check any unfamiliar insurance companies with your state's insurance department, and ask for a list of other companies who have purchased a particular policy so that you can check references before making a decision.

Take full advantage of government incentives for providing health insurance. Your company may be able to take advantage of state and/or federal incentives and tax benefits to help reduce the cost of offering health insurance coverage to your employees. Find out what incentives are available to your company, so that you can take them into account when considering small business health insurance coverage.

Look for ways to help employees pay their health-related costs. If you can't afford to offer health insurance coverage for your employees, you may be able to help them purchase health services on their own. One option is to offer flexible spending accounts, which allow employees to set aside pretax dollars to use for health-related expenses. Another good option for firms with a limited benefits budget and/or a diversified workforce is a cafeteria plan. With a cafeteria plan, your company can provide a set amount of money that employees can direct toward a menu of benefits, which could include health insurance or health-related benefits. Each employee selects the benefits he prefers. With a cafeteria plan, you and your employees may be able to get the most from your benefits dollars while increasing overall employee satisfaction. Flexible spending accounts and cafeteria plans must meet IRS regulations, so talk with a knowledgeable accountant or human resources specialist before setting up a plan to ensure that it meets all requirements.

Check out what competitors offer. Find out whether your competitors offer health insurance coverage and, if you can, what level of benefits they provide. You may need to provide comparable coverage in order to compete for or keep the most qualified employees.

Communicate. If you simply can't afford to offer employees health insurance coverage, let them know why.

Sources:

Tiare Rath, sbinformation.about.com, Small Business Health Insurance: Five Ways to Reduce Small Business Health Insurance Costs

Elaine Cho, www.dol.gov, Health Benefits Education for Small Businesses

www.tree.com/insurance, Taking Advantage of Health Insurance Incentives: A Small Business Owner's Guide

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