Small Group Health Insurance

Starting and running a small business is extremely difficult, and at the same time, incredibly rewarding.  The struggle of achieving your goals and dreams is something no one can ever take away from you. But you soon realize that achieving your business goals requires the help of others, it requires hiring employees to join your team.  This blog is for all of those small business owners who are achieving their dreams and growing their team, and who are looking for guidance on investing in employee benefits.

Why offer coverage
The simple fact is that health insurance allows us to pay for the high price of our expensive healthcare system.  It’s a necessity, like electricity, food, and shelter; at some point in your life you will need to use the healthcare system and health insurance is the primary way we pay for those expenses.  So just as your employees expect a paycheck, they will expect you to offer a robust benefits package.  The best employees are the most responsible, and responsible people have families, and they care for others.  So health insurance is a necessity to people like this.  Provide good benefits and you will attract good people. 

Offering health insurance will do a few basic things for your business:

• Improve hiring and recruiting – A robust benefits package will appeal to both new hires and current employees alike.
• Employee loyalty and retention – Offering group health insurance can help small businesses keep their top employees for the long term.

What coverage to offer
Because your preference for health insurance may not match your employees, after all you will have different financial means and different health histories, its important to provide your employees with multiple options. Offer a wide variety of plans and allow your employees to choose.  Ultimately this will make managing the plan easier. Providing options gives your employees some ownership over their healthcare, and will help you meet the needs of most, if not all, of your employees.

Here are a few basic tips:

• Offer both HMO and PPO
• Offer a “low” plan and a “high” plan; plans that are affordable and richer plans with better benefits.
• Dont pay 100% of the cost for your employee
• Increase your contribution based on employee loyalty and longevity
• Offer lots of voluntary options: such as Dental, Vision, Life, Flexible Spending Accounts and Dependent care accounts, Disability and long term care.

It may seem like a lot, but offering all of these plan options will actually make your life easier in the long run as you wont have to make any adjustments down the road, you will already offer everything an employee is looking for.  The hard work will be on the employee to choose how to spend their benefit dollar. When the price of one benefit increases, employees can switch to a different more affordable option.  This strategy will NOT cost you more money; it will save you money, as you are not required to pay for ANY of these voluntary benefits.  The employees can pay 100% of the cost of voluntary benefits.

How much should you pay?
This question is more abstract and will vary with industry, but in general, the best and biggest companies offer the best and most expensive benefits.  Use my family as an example: My wife is a school teacher, the school district she works for offers excellent health insurance coverage along with other benefits such as a pension, and dental and vision coverage.  The value of our family health insurance alone is over $2,200 per month. Now before you get sticker shock, ask your self this question, “When was the last time you noticed a teacher quit their job and go to work somewhere else?”  NEVER.  Employees who are offered benefits this valuable:

• Know the value of their health plan is more than just the monthly cost
• They use and rely on their health insurance
• They will be loyal to their employer over the long term

All of these points allow you as the employer to build the strongest team possible and save time and money in the long run by attracting and retaining the best employees.

As a small business owner, start out with a small benefits budget that is sustainable for your company. But expect to grow your benefits budget each year as your revenue and company continue to grow. 

Summary
If it seems like a lot, do this first, review your monthly profit and loss statement and determine how much you can spend on each employee you hire, per month, on top of their hourly pay or monthly salary.  Think more along the lines of $300-$600 per employee, per month. Then work with a professional health insurance agent, or call my office, who will design a benefit package that fits your budget and that your employees will be thankful to have.