Wednesday, January 9, 2019

Health Insurance Options for Small Businesses(Part-1)

California has always been the home of innovation, new business ideas and ventures. Besides the well-established large and medium corporations that have made a firm home in the state, there are an ever-increasing number of smaller enterprises based here. All these businesses, large and small, face challenges every day and their ability to overcome them is what leads to success.

There is one area, however, where small businesses are badly hit – the healthcare costs of their employees. Healthcare is a critical component of employee motivation and loyalty, but the cost can be too much to bear. In the last 15 years, the average cost of covering an employee under a group health insurance plan increased from $2,196 to $6,435 – a rise of almost 300%.

For many enterprises, this cost has become unsustainable and healthcare benefits are being dropped. This has an immediate impact on overall productivity and employee motivation. Furthermore, the fight to retain talent in the near the future will become increasingly bitter, and businesses without health benefits will be on weak ground.

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The solution

Fortunately, many small business health benefits are available. Each has its own pros and cons, but they do help small and medium businesses to consider five options on their employees’ health benefits at costs that are viable. It is best for small businesses to know what they are and what each one can offer. The present post covers two of these options and the next will cover the remaining three.

Although the options mentioned here are among the most suited for small enterprises, the fact remains that health insurance is a complex subject; it is essential to seek expert advice to personalize the best option on a case-by-case basis. An expert insurance broker with considerable experience in corporate health insurance policies will be best placed to provide all the details about the right coverage at an affordable cost.

QSEHRA

The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) enables businesses having employees under 50 to offer health coverage with a monthly tax-free allowance; they can use it to pay for personal health insurance. The employees get the benefit and the business is able to control its healthcare costs.

Traditional group health insurance

This is a traditional health coverage option, which most people are familiar with; the employer has to pay a fixed premium for a policy that covers its employees. Part of the cost may be passed on to the employees. The employees are responsible for the deductibles and co pays for any health service they avail of.

It is a simple system, which most employees are comfortable with. However, the cost can be quite high. According to recent studies, the average cost of coverage for an employee’s family, if the business has employees under 500, is expected to increase to over $13,000 in 2019. Despite the convenience, this cost could be unsustainable for many small enterprises.

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