How Small Businesses Can Obtain Health Coverage
No one told you how difficult it would be to hire for your business! Especially right now…the market is competitive and employers everywhere are looking for ways to sweeten their offerings. Aside from these efforts, employers are generally looking for better ways to take care of their employees. Sometimes that does look like increasing pay, sometimes it means health coverage.
If you are a small business this may likely be a new venture for you. Health coverage may seem like something reserved for the big businesses with big budgets. However, small operations will find there are plans out there that fit your budget.
In this article, we will discuss finding health insurance, the Health Savings Plan which could have tax advantages, and how to establish life insurance as a business expense to cover your family’s needs.
Finding Health Insurance
When we begin looking for health insurance many of us may turn to the companies we know, Aetna, United, Blue Cross, etc. However, these companies are often financially out of reach for small businesses.
Luckily two alternative options make it possible for small businesses to obtain the health coverage they need.
Fully-Funded Health Plan
The first option is a fully-funded health plan. Under a fully-funded health plan, your carrier is the one that will assume risk and hold the policy.
You as the employer will pay a fixed monthly rate. Which can be great for budgeting and setting expectations. The caveat here is your rate can go up drastically the following year if excess claims are submitted in the current year.
Self-Funded Health Plan
The second option is a self-funded health plan. It is similar to the fully-funded health plan except for the responsibility shifts from the carrier to you, the employer.
This can sometimes be cheaper since under a carrier you can expect markup fees. You will also save a bit when it comes to tax advantages and decreased costs if employees were to submit fewer claims than expected.
There are certainly pros and cons of each plan but the right decision is not one size fits all. To decide how to best take care of your employees you should consider your budget and other factors that could influence how health insurance affects your business.
Health Savings Account
A Health Savings Account (aka HSA) is a way to save for health expenses while also helping decrease your tax liability. How it works is you, as the employer, and the employee both contribute to this savings account. Contributions are made with pre-tax income and in return, you and your employee receive tax benefits.
For the employee, they can contribute before taxes are paid. This account can then be used to pay out-of-pocket medical costs with pre-tax income. This account is tied to a specific employee, not employer. Which means that any unused funds can be collected over time.
As the employer, you will find a bunch of tax benefits. From income tax deductions to not having to pay for payroll taxes on pre-tax contributions to your employees.
Many people consider life insurance to be a personal expense and rightly so. However, many people do not own businesses. As a business owner you are not just responsible for your family but the financial health of your employees. You have clients that likely rely on your product / services. A lot more sits on your shoulders aside from your family.
This is why life insurance is especially important for business owners. This is recognized by many insurance companies and so they have formulated plans that are both affordable and provide proper coverage to those who rely on you.
When you purchase life insurance that covers both your family and business, you will find that some of these deals can be less expensive when packaged together. You will also find that your monthly fee can then be charged as a business expense. This can help decrease your personal expenses while decreasing your tax liability due to this business expense.
When you begin to bring on employees and contractors, every business owner also begins to feel a certain amount of responsibility for taking care of those workers. The larger you grow and the more work they do for your business, the more responsibility you will feel. This means taking care of their health and yours too!
If you are looking into what health coverage plans or life insurance may be right for your business, consider scheduling a consultation with us.
We frequently discuss these matters with our clients who are growing and looking for better ways to take care of their team. There are affordable options out there, you may just need a bit of guidance on where to look.
To schedule a consultation, start here.