In today’s talent marketplace, offering employee benefits can help you set your business apart from other employers. It can not only help you attract employees, but it can help you retain them, too. But finding the right benefits package can sometimes be a challenge – especially for small businesses. What should you consider in evaluating benefits options in your quest to reduce your group insurance cost?
Tips for Reducing Health Insurance Costs
1: Choosing the right plan
The small business health insurance marketplace offers you a variety of options. You can choose a traditional (fully insured) health plan from a wide range of insurers. You can choose a public plan like the Covered California Affordable Care Act (ACA) exchange. You can even choose a private exchange like CaliforniaChoice, which has been serving California small businesses since 1986.
You may be interested in a level-funded health plan, operated by a commercial insurer. Or you could choose a self-funded plan where you pay the claims directly, instead of paying an insurer a premium and it pays the claims.
Another option is a fully insured plan where you determine the amount of money you want to pay toward your employees’ health insurance benefits. It’s called a Defined Contribution plan.
You can choose a fixed dollar amount or a fixed percentage of the cost for a specific plan and/or benefit. Your employees apply your generous contribution to the health plan and benefits they prefer. If an employee selects a plan that costs more than your contribution, he or she simply pays the difference through payroll deduction.
2: Matching coverage options to employee needs
Once you’ve narrowed your insurer or administrator choice, the next consideration is coverage type. Would you and your employees prefer an HMO, PPO, HSA-compatible, or other plan? Can you afford just one – or maybe all three? When it comes to health care today, one size does not fit all.
A High Deductible Health Plan with a Health Savings Account may be your most-affordable option, but will all of your employees be satisfied? Maybe an HMO is a good compromise. If you choose a Defined Contribution health plan, you can offer your employees a choice of insurer and plan type, so they can find a plan that best meets their individual or family health needs.
CaliforniaChoice offers coverage from seven health plans and insurance companies through a single program. Employees can choose from dozens of coverage options. One employee might choose a PPO from Anthem Blue Cross because of a particular doctor or hospital in its network. Another employee, who rarely visits the doctor, might choose an HMO from Kaiser Permanente, Health Net, United Healthcare, or a regional health plan. A third employee must choose a Health Savings Account-compatible plan because of its cost and tax advantages. Whatever your employees’ needs, it’s their choice.
3: Looking beyond costs
When you’re considering your costs for offering health insurance to employees (and dependents, if applicable), look beyond the premium you pay. For most health plan, you can deduct many of your costs from your business’s federal and state taxes.
Under current law, the premiums you pay for employees’ health insurance are exempt from income taxes and payroll taxes.
If you don’t offer group health coverage but do offer a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), you could qualify for a tax credit. Visit HealthCare,gov for details.
Of course, there are other things to consider, too. Not offering health insurance can adversely affect your employee turnover, increasing your onboarding and training costs.
What if your employees want more?
Your selected insurance company, administrator, or program may allow you to add benefits for Dental, Vision, Chiropractic, and Life and AD&D.
CaliforniaChoice offers three Dental options: a MetLife DHMO, a SmileSaverSM DHMO, and an Ameritas Dental PPO. Comprehensive vision benefits are available through the Voluntary Vision Program. Landmark Healthplan offers chiropractic exams, adjustments, and acupuncture treatment. Assurity Life offers Life Insurance that includes AD&D benefits and a living benefits provision.
Some programs include no-cost, value-added benefits. CaliforniaChoice offers a bevy of added benefits through its Business Solutions Suite and Member Value Suite.
The Business Solutions Suite includes a free Flexible Spending Account (FSA) that gives employees the ability to set aside a portion of their salary on a pre-tax basis for FSA medical expenses like copays and prescriptions. Also included are Cal-COBRA or federal COBRA services for participant invoicing and collection, premium remittance, payment tracking, and processing. A third benefit is set-up of a Premium Only Plan (POP) that allows employees to pay their insurance premiums pre-tax – reducing your tax liability as an employer.
The Member Value Suite offers discounts for employees for dental care from 20,000 Dentegra Smile Club dentists. Discounts on frames, lenses, and eye care are available at LensCrafters, Target, Pearle, and other providers. EPIC Hearing offers discounts of up to 50% on hearing-related products. Movie, theme park, travel, and other discounts are available through Cal Perks. ChooseHealthy® offers savings on fitness and wellness, including gym memberships at $28 per month at thousands of facilities nationwide. The California Rx Card® can save members up to 80% on prescription drugs – often reducing your cost to less than insurance copay on Rx.
One of the best ways for you to ensure you’re getting the best value for your health insurance dollars is to talk with an employee benefits broker. Using a broker doesn’t cost you anything. And it could save you money. If you don’t already have a broker, CaliforniaChoice makes it easy for you to find one.
