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Small businesses are often at a disadvantage when competing with bigger companies. Larger companies have more money, more employees and can often attract the best talent with richer employment packages. What’s more, larger companies are able to hire full–time benefits administrators, experts who can ensure that, among other things, they have found employees the best options from the seemingly complicated world of health care.
It’s no surprise that small business owners surveyed by the National Federation for Independent Business put the cost of health insurance at the top of their list of most critical problems facing small business. And the Kaiser Family Foundation reports the number of small employers (companies with 3–199 employees) offering health coverage declined from 68 percent to 63 percent over the last three years. That means an additional 5 million workers without health insurance. Locally, the numbers don’t get much better. In fact, according to Families USA, 8.5 million people in Texas are uninsured, 82.1 percent of whom are from working families.
Your company doesn’t have to be part of that growing number. By applying some simple strategies, you can not only continue offering health benefits to your employees, but can do so in a way that’s less disruptive to the financial health of your company.
Here are some of the key components that can help you get the most from your health benefits budget:
- Choice – When it comes to health coverage, one size does not fit all. Employees have different needs. Some want comprehensive coverage and are willing to pay for it. Others would rather pay less out of their paycheck each month in exchange for more basic coverage. If you’re funding full coverage for these employees, it may be more coverage than they need or want. Some insurers will let small employers offer two, three or more health plans side–by–side. That way, employees choose the level of coverage that’s right for them. You don’t pay for more than your workers need, and more of your employees may elect health coverage – all of which can help keep health benefits affordable.
- Consumer engagement – Consumers are emerging as the most promising players to contain health care costs. For most consumers, economic realities remain hidden with many believing the total cost of a visit to the doctor’s office is their $20 co pay. But when people are spending a meaningful share of their own money, and are given good information to do it wisely, they will make better spending choices for themselves and ultimately for your company as a whole. Consider plans that give consumers responsibility, like those with a front–end spending account. As consumers spend the account on health care services, they have good reason to investigate the true costs of care and an incentive to make cost–conscious decisions. In addition to providing employees with benefit options, you can also point them in the direction of various tools to help them plan and budget for their anticipated health care needs. For instance, employees can use the Family Health Budget (www. familyhealthbudget.com) to estimate health care costs for the year. These types of tools will help them become smarter health care consumers, which may ultimately drive down health care costs overall.
- Tax advantages – Employers can use tax–advantaged spending accounts to help manage the cost of health benefits. Several kinds exist. Health Savings Accounts (HSAs) allow employees to save money for medical expenses and invest the account on a tax–deferred basis. The employer, employee, or both contribute to the account. HSAs are typically paired with a high–deductible health plan, offering premium savings, and HSAs are portable, so employees can take the account with them from job to job. In a Health Reimbursement Arrangement (HRA), the employer contributes to a health care account on a pre–tax basis, and employees use the money to pay for qualified medical expenses. Employers can realize premium savings by combining the HRA with a high–deductible health plan, and employers need not fund the entire account at once, which helps cash flow. One challenge can be the administrative work in setting up the account, so look for an insurer that offers the HRA and health plan in one easy–to–administer package. Lastly, employees can save pre–tax money for health expenses in a Flexible Spending Account (FSA). The downside of an FSA is that the account does not roll over from year–to–year, meaning employees must “use it or lose it.” FSAs are easy to use because of the associated debit card consumers use to access the account, sometimes combined with an insurance ID card, which they just swipe to pay co–payments or other health care charges. Having such a card can encourage more employees to take advantage of spending accounts like HSAs or HRAs.
- Value–added extras – Clinical programs may help employees with chronic conditions. Web–based information and tools, such as online calculators, can help employees forecast out–ofpocket costs for health care services. Ask your forward–thinking health plan for their educational materials to help you explain the realities of today’s health care environment.
Rely on an Expert Finally, purchasing health insurance can be complex, so it always helps to have a trusted advisor. Seek out an independent insurance agent or broker – someone who knows the local market and can help you compare plans and features.
No one should minimize the challenge facing small businesses when it comes to health benefits, but with some careful planning and sound strategies, manageable health benefits might be closer than you think.
