Pa Small Business Health Insurance – Small businesses are the backbone of this country, employing more than 47% of US self-employment, or 60 million people. You may be a small business leader weighing the pros and cons of offering employee health insurance.
At one point, every small business was in your shoes. They had to decide what to do with health insurance. According to the SBA, 50 percent of small businesses with 3 to 9 employees offer health insurance benefits to their employees. About 71% of small businesses with 10 to 24 employees offer health insurance benefits, and 85% with 25 to 49 employees do.
Pa Small Business Health Insurance
The Affordable Care Act states that small businesses with fewer than 50 employees do not have to provide health insurance benefits to their employees or pay a non-payment penalty to the IRS. This does not mean that they should not offer health insurance benefits.
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Regardless of the size of the employer, health insurance benefits are a great deal for employees. A 2020 survey of 2,000 people found that 84% put health insurance at the top of their list of most desired benefits, and the Society of Human Resource Management (SHRM) reported that 92% of employees say benefits are important to their overall job satisfaction. .
These numbers prove that benefits are a major contributor to talent acquisition and retention. Happy, healthy, caring employees are more loyal, productive, and appreciate your business. Yes, health insurance plans can be expensive, but with so many small businesses (your competition) offering health insurance benefits, can you afford it? Think of health insurance benefits less as an expense and more as an investment, which results in a better employee.
There’s no getting around the fact that healthcare, in general, is expensive. However, there are ways to reduce the cost of your health insurance while providing great benefits to your employees. While traditional, fully funded plans are the most common (think the big boys, like Blue Cross Blue Shield, Aetna, Humana, United, etc.), their costs and uncertainty are driving many small businesses to look elsewhere. And when there is a need, a solution will surely follow.
The Self-Finance Program is one of the traditional programs and attracts small businesses across the country. It is important to understand the difference between a fully funded health plan and a self-funded health plan.
Self Funded Insurance Plans 101
A fully funded health plan is funded by the insurance company rather than the employer. The carrier assumes all risk and owns the policy. Your company pays a fixed monthly premium to the carrier to pay your employee’s claims and administer/administer the plan for you. Regardless of how many claims your employees make or how expensive those claims are, the carrier, not your company, bears the risk of paying (or denying) them.
Although the fully funded program is predictable from month to month, it is highly unpredictable from year to year. You may know what you will pay throughout the year, but there is no way to know what you will pay next year. If your company’s health care claims are higher than your carrier’s premium calculations, you can expect your premiums to go up next year.
In addition, health care costs have increased annually – expected to increase by 6.5% by 2022 as the ongoing COVID-19 pandemic continues to increase the use and cost of medical services.
A self-funded health plan is funded by the employer rather than the policyholder. This means your company takes all the risk and pays your employees’ claims as they come in. Your company will also be responsible for the administration and management of the program.
Group Health Insurance
It may sound overwhelming, but a self-funded health plan has significant cost benefits. First, by removing the carrier, you avoid markup charges and get some tax benefits. You only pay for the health care used by employees. If employee requests are low then you less and if they are high then more. A traditional carrier works like your auto insurance: you pay a fixed premium whether there are claims or not.
For added protection against high claim costs, there is a type of self-funded health plan called a tiered health plan. A tiered financing plan includes stop loss insurance to protect against “catastrophic” claims that could blow your budget. Stop loss insurance covers the amount above a set limit (cap) that you will be required to pay. If claims are more than your cap, stop loss insurance, and if claims are less, your company gets a discount to cover the difference. You’ll never see a discount from a traditional, fully funded plan.
Another advantage of some standard-sponsored health plans is that your employees don’t have to choose “in-network” providers, no matter what plan they choose. For example, employees looking for a low-cost plan with high premiums don’t have to give up the ability to choose their own doctors and specialists. Giving your employees this flexibility is a great way to sweeten a benefits package that businesses with traditional health insurance can’t.
If you’re a startup or small business without health insurance benefits, now is the time to get a plan if you have the budget. The longer you wait, the more likely you are to lose good talent and hear complaints in the office about people wishing you well. To keep morale high and build your brand reputation, health insurance benefits must come first.
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Providing health benefits may depend on the size of your company. If you have a handful of employees, you may not be ready to jump in, preferring to grow a little first. Just remember that benefits are expected, even for employees at very small companies. Some companies consider their plans “hired,” allocating a portion of the budget to spend on new hires for a health insurance plan that covers all employees. Startups often build into their financing plan the cost of benefits package that they fund from investors.
Once you’ve decided to invest in a program, you can determine which type of program is best for your budget and your workforce. Talk to the dealer or individual carriers and providers to see your options. Traditional programs are more flexible than self-funded/scale-funded programs, especially for small businesses. You’ll likely be able to further customize your plan with these non-traditional options.
Either way, you’ll be able to offer health insurance to your employees as soon as the provider gives you the green light. Open enrollment is the time you need to enroll your employees, and have insurance set up. Not all employees should enroll, as some may already be covered by a spouse or parent’s plan, or may choose to seek their own health insurance.
Healthcare is exciting, so market to your employees in creative ways across multiple channels. Be sure to allow time for Q&A, and let your provider know any questions you can’t answer. Your employees have different health care needs and budgets, so offering a variety of plan options is the best way to ensure that those who want to participate can find a plan that works for them.
How Will The Affordable Care Act Affect Employee Health Coverage At Small Businesses?
Once open enrollment ends, non-participating employees cannot enroll after another open enrollment period, usually one year. There are exceptions, such as when an employee has a “qualifying life event” that includes losing their current health plan, getting married or divorced, having a child or adopting a child, or changing residence. New hires may enroll during their employment regardless of the open enrollment date.
Providing employee health benefits is one of the best investments small businesses can make. Research your options and find a plan that fits your goals and budget. It may seem like thinking outside the “traditional” box, but the reward is a health plan that benefits your employees.
Health benefits should not be confused. We’ll cover the basics so you can make the right decision for your business. The Health Insurance Marketplace Calculator provides estimates of health insurance premiums and subsidies for people who purchase insurance on the health insurance exchanges (or “marketplaces”) created by Affordable Care. Act (ACA). With this calculator, you can enter your income, age, and family size to estimate your eligibility for subsidies and how much you can spend on health insurance. You can use this tool to estimate your Medicaid eligibility. Eligibility requirements may vary by state, please contact your state Medicaid office or marketplace with enrollment questions. We encourage other organizations to embed the calculator on their websites using the embedding instructions.
The Health Insurance Marketplace Calculator is based on the Affordable Care Act (ACA) as it was signed into law in 2010, and subsequent regulations issued by the Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS). The calculator includes the 2023 subsidy increase from the Depreciation and Inflation Act.
Employer Health Insurance Plans For Small Businesses
The premiums shown in the calculation results are based on actual exchange premiums
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