Rising healthcare costs constitute a major burden for small businesses even during healthy economic periods.
According to The Commonwealth Fund, 37% of small business owners considered the cost of providing healthcare coverage to their employees as the biggest challenge facing their business – and that was before the pandemic. Additionally, 83% of small businesses feel that offering health benefits is simply too expensive.
Aside from overall cost, small businesses also noted the following challenges when it comes to providing healthcare coverage to employees:
- Lack of choices in healthcare plans
- Rising cost of prescription drugs
- Ever-changing government rules and regulations
- Lack of access to clear, unbiased information and data to make informed health coverage choices
- Time required for administration and paperwork
- Finding in-network doctors and hospitals
Small businesses aren’t just looking for traditional health insurance – they are also looking for ancillary benefits to offer to their employees, such as dental and vision plans.
A broker is just the right expert small businesses need to guide them through these concerns. They are there to help them make the right choices and ensure that they are providing the best health benefits for their employees to help attract and retain top talent.
Benefits of Working with Small and Medium Business (SMB) Health Insurance Brokers
SMBs have a lot to gain from working with health insurance brokers. Brokers have expertise in SMB health insurance and can help them with finding the best plans, how to cut costs, and provide ongoing support.
Some specific small business health insurance broker benefits include the following.
- Budget adherence: SMB health brokers can easily compare plan costs, which enables them to find just the right health coverage that meets the needs of small business budgets.
- Health plan discovery and personalization: Brokers are experts at researching and finding or developing the best SMB health insurance plans to meet the unique needs of each business. Their handling of this research also saves them their time.
- Strategic cost savings: Brokers can find extensive cost-saving opportunities when it comes to prescription drugs and other healthcare needs.
- Knowledge of ancillary benefits: Brokers can advise small businesses on ancillary benefits such as dental plans and vision plans.
- Access to plan information: Brokers can easily access policy information to ensure accurate plan comparisons.
- Ongoing support: SMB health brokers are also the best consultants to provide ongoing support by:
- Keeping small business up to date on the latest health insurance rules and regulations
- Helping them adjust their plans to meet new legal guidelines
- Assisting with health insurance administration tasks and paperwork
- Helping small businesses find the best in-network care options
Lowering Health Insurance Costs for Small Businesses
Brokers can save small businesses money on health plans by:
- Negotiating directly with insurance providers to lower premiums
- Consulting with clients on their budget and advising them in the direction of level-funded health plans
- Steering clients toward value-based payment models instead of fee-for-service models
- Assisting small business clients in obtaining a health plan that utilizes fair-value reimbursement to pay providers
With cost of coverage to employees being the biggest challenge small businesses face when it comes to health insurance, brokers have a lot of room to aid in keeping their costs manageable.
However, brokers aren’t the only ones in the equation who can help lower costs. Businesses can also take actionable steps to reduce their own costs by:
- Evaluating their current plan and claims to identify money-saving opportunities
- Reviewing cost-sharing options
- Considering self-insurance so they can set their own deductibles, copays, and maximum benefits
Comparison of Health Insurance Plans for Small Businesses
There are a few different types of health plans available to small businesses, including:
- Group health insurance coverage through a health insurance company
- Health reimbursement arrangements (HRAs)
- Health savings accounts (HSAs)
- Health flexible spending arrangements (HFSAs)
Brokers are experts in the benefits and risks of each plan type and can provide personalized recommendations to help businesses choose the best plan for their unique situation. However, it’s important for small businesses to also be knowledgeable on available plans to assist in making an educated decision.
Below are some of the pros and cons of each type of SMB health plan.
1. Group Health Insurance Coverage
Group health insurance plans can vary greatly, especially in cost. They do, however, have a few similarities, including:
- A 70% participation requirement
- The choice of group members to enroll in or decline employer coverage
- Split premiums between the employer and employee
- Family members and dependents may be added at an additional cost
Offering group health insurance helps with employee happiness and retainment and provides tax benefits for your business.
2. Health Reimbursement Arrangements (HRAs)
An HRA is a self-insured health plan. Self-funded plans enable employers to work with brokers to customize plans that work best for their business and their employees.
With an HRA, there are no premiums employers must pay to a health insurance group. Instead, the employer takes on the responsibility of paying employee health claims.
Benefits of HRAs include:
- Contributions are 100% tax deductible for the business
- Employees receive tax-free money for qualified medical expenses
- Businesses control deductibles, maximum benefit amounts, and copays
- Cost savings for employers who aren’t paying a markup to cover overhead for health insurance companies
- Unused funds can be rolled into the next year’s account or funneled back into the business
3. Health Savings Accounts (HSAs)
A health savings account (HSA) is an account that allows both businesses and employees to set aside pre-tax funds to pay for qualified medical expenses. These untaxed funds can be used to pay for:
- Deductibles
- Copays
- Coinsurance
- Other qualified medical expenses
Benefits of HSAs to small businesses include:
- Lower monthly premiums
- Savings on FICA taxes
- Additional retirement benefit for employees
4. Health Flexible Spending Arrangements (HFSAs)
Money set aside in an HFSA is also untaxed and can be used to pay out-of-pocket healthcare expenses, including dental. Employers have the option to make contributions to employee HFSAs but are not required to.
Some things to consider when it comes to HFSAs include:
- Annual contributions are limited to $3,050 per year per employer.
- HFSA funds can be used to pay deductibles and copays but not insurance premiums.
- You can use an HFSA to pay for prescriptions and some medical equipment.
- You cannot use an HFSA in combination with a marketplace plan.
Brokers know these SMB health plans like the back of their hand and can help businesses navigate all the associated rules and regulations while keeping cost and needs in mind.
How to Save Money on Small Business Health Insurance
When working together on SMB health insurance plans, brokers and small businesses have a plethora of ways to identify cost-savings opportunities. Here are just a few ways for small businesses to save money on health insurance.
1. Work with a Broker
Brokers are the experts when it comes to small business health insurance. They can provide employers with all of the policy, cost, and comparison information needed to make the most informed and beneficial decisions for your business.
2. Consider All the Options
Take the time to shop around with your broker. Businesses should consider all of their options when it comes to insurers, plan types, and plan tiers.
3. Provide an HSA-Compatible Plan
HSAs give employers the opportunity to save on premiums while still offering employees health coverage.
4. Take a Look at FSAs
When it comes time for open enrollment, allow your employees the chance to establish an FSA. An FSA allows employees to contribute pre-tax funds from their paycheck to an account they can use to pay certain healthcare costs for themselves, their spouse, and their dependents.
5. Contemplate Virtual Care Options
Many health plans now offer free or low-cost telemedicine options. Telemedicine is a great way to save money and time on routine checkups or simple medical issues.
6. Educate Employees on Health Insurance
Inform employees of the benefits that the chosen healthcare plan has to offer and encourage them to use all of their resources.
7. Promote Health in the Workplace
Incentivize employees to care for their health through programs, benefits, and preventive care. The healthier the workforce, the lower its healthcare costs.
8. Review Your Plan and Claims
Always be reviewing what is and is not working in your small business health insurance plan so you can make more informed decisions when it comes time to renew.
9. Ask for Support
Any time you have an issue with your plan, report back to your broker. Remember that your broker is the expert and is there to provide ongoing feedback and support.
10. Make Changes When Needed
Once you have reviewed your plan, identified any issues, and consulted with your broker, make the necessary adjustments that will continue to benefit both your employees and your business.
Start Saving on Health Insurance: Partner with a Broker
When it comes to SMB health insurance, there is clearly no lack of options. The challenge is finding the right option for your business.
Meeting with an expert small business broker is the perfect opportunity you to review your healthcare options, make informed decisions, ask questions, and benefit from ongoing support.
Redirect Health believes that everyone should have access to healthcare that is affordable and simple to use. Learn more about our health plans for small businesses through Redirect Health.