Affordable Group Health Plans for Small Businesses
By Wiley Long III – President HSA for America – Reviewed by LESLIE JABLONSKI
Fact checked by MIKE MONTES – Updated Sept 12, 2024
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Are you a small business owner looking for an affordable health insurance plan for your employees?
If so, you’ve come to the right place. We’re here to simplify the process, help you find a group health insurance solution you can afford, and guide you every step of the way.
At HSA for America, we believe that offering health insurance is a strategic advantage that can help you attract and retain the best talent, enhance employee satisfaction, and improve overall productivity. Our platform provides you with the tools and information needed to make informed decisions about health insurance options that are both cost-effective and comprehensive.
We specialize in helping small businesses with less than 50 employees find less expensive ways to provide health benefits.
CASE STUDY: SMALL ARCHITECTURAL FIRM (10 EMPLOYEES)
We worked with a small architectural firm with 10 employees. They wanted a strong plan that also covered their employees’ families. In pricing group plans, the best we found was a plan with Blue Cross Blue Shield for $23,200 per month.
These was essentially a Silver-level plan with a $4,500 deductible.
Because the company was expanding their 401(k) matching contributions, they were hoping to cut their costs on their health insurance.
THE SOLUTION: HSA for America’s Personal Benefits Manager met with the management and went over the employee census.
Most of the ten employees were relatively young and in excellent health. The firm also had two older employees – the owner-employee and the senior manager- who also had significant pre-existing conditions. All ten were white-collar professionals, however, who qualified for little or no subsidy to help them afford a Marketplace health insurance policy.
Because the eight younger employees had no pre-existing conditions, HSA for America worked with the firm to transition these employees to a good health sharing plan, dropping the traditional group health plan altogether.
Savings
This generated immediate overall savings of close to 50% compared with either the unsubsidized cost of traditional health insurance product, or the $23,200 per month overall cost of the Blue Cross Blue Shield plan that was available.
Implementing a QSEHRA Plan
For the older employees, health sharing would not have been suitable, because health sharing typically have waiting periods of a few years before the cost of treating these pre-existing conditions would become fully shareable.
But by dropping the group health plan altogether, the firm became eligible to establish a Qualified Small Employer Health Reimbursement Arrangements (QSEHRA).
The QSEHRA allowed the firm to reimburse both employees for the full cost of an individual health insurance policy, tax free.
This provided the following benefits:
- Amounts contributed to the QSEHRA are fully tax deductible to the firm as a compensation expense.
- Contributions are also exempt from payroll taxes – providing savings for both the firm and the employees compared to cash compensation.
- There is no income tax for the employees on any reimbursement received.
- The traditional health insurance policies provide full coverage for pre-existing conditions from Day One.
- Each of these two-employees got to choose the individual health insurance policy that worked best for their own individual situation and budget.
For the other employees, we set them up on a healthshare program through netWell. We also added dental coverage and a $0 deductible accident rider. This program lowered their initial out-of-pocket costs from $4,500 to $2,500.
RESULT: The total group insurance monthly premiums fell to $9,530 per month.
SAVINGS: More than $175,000 per year.
CASE STUDY: SMALL ARCHITECTURAL FIRM (10 EMPLOYEES)
We worked with a small architectural firm with 10 employees. They wanted a strong plan that also covered their employees’ families. In pricing group plans, the best we found was a plan with Blue Cross Blue Shield for $23,200 per month.
These was essentially a Silver-level plan with a $4,500 deductible.
Because the company was expanding their 401(k) matching contributions, they were hoping to cut their costs on their health insurance.
THE SOLUTION: HSA for America’s Personal Benefits Manager met with the management and went over the employee census.
Most of the ten employees were relatively young and in excellent health. The firm also had two older employees – the owner-employee and the senior manager- who also had significant pre-existing conditions. All ten were white-collar professionals, however, who qualified for little or no subsidy to help them afford a Marketplace health insurance policy.
Because the eight younger employees had no pre-existing conditions, HSA for America worked with the firm to transition these employees to a good health sharing plan, dropping the traditional group health plan altogether.
Savings
This generated immediate overall savings of close to 50% compared with either the unsubsidized cost of traditional health insurance product, or the $23,200 per month overall cost of the Blue Cross Blue Shield plan that was available.
Implementing a QSEHRA Plan
For the older employees, health sharing would not have been suitable, because health sharing typically have waiting periods of a few years before the cost of treating these pre-existing conditions would become fully shareable.
But by dropping the group health plan altogether, the firm became eligible to establish a Qualified Small Employer Health Reimbursement Arrangements (QSEHRA).
The QSEHRA allowed the firm to reimburse both employees for the full cost of an individual health insurance policy, tax free.
This provided the following benefits:
Amounts contributed to the QSEHRA are fully tax deductible to the firm as a compensation expense.
The traditional health insurance policies provide full coverage for pre-existing conditions from Day One.
Contributions are also exempt from payroll taxes – providing savings for both the firm and the employees compared to cash compensation.
There is no income tax for the employees on any reimbursement received.
Each of these two-employees got to choose the individual health insurance policy that worked best for their own individual situation and budget.
For the other employees, we set them up on a healthshare program through netWell. We also added dental coverage and a $0 deductible accident rider. This program lowered their initial out-of-pocket costs from $4,500 to $2,500.
RESULT: The total group insurance monthly premiums fell to $9,530 per month.
SAVINGS: More than $175,000 per year.
Read on the go, Complete Guide to Small Business Healthcare Plans.
Top Alternatives to Traditional Group Health Insurance For Small Businesses
Health Sharing
|
High group insurance premiums have priced too many businesses out of the traditional health insurance market. Fortunately, employers have alternative solutions. One is dropping health insurance and instead offering an employee health sharing plan. These plans can cost up to 50% less than group health insurance premiums. Plus, employers have much greater leeway in determining how much to contribute to employee healthcare costs compared to group health insurance products. |
Differences Between Health Sharing and Insurance
|
Health sharing is not the same thing as health insurance. For example, health sharing plans impose a waiting period before they will share costs for pre-existing conditions. Also, unlike traditional group health insurance premiums, health sharing costs are taxable for employees and do not qualify for Affordable Care Act subsidies, like individual ACA-qualified health insurance products do. Despite this, the cost savings from switching to health sharing can still be significant, particularly for companies with relatively healthy individuals without pre-existing conditions. |
QSEHRAs – Put Purchasing Power In Workers’ Hands
|
Alternatively, employers that don’t sponsor a group plan set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). This is a tax-favored program that lets employers reimburse employees for their health insurance premiums tax-free. Workers choose their plans, and then submit a request for sharing to pay or reimburse them for premiums. In summary, small employers can choose from several options like participating in SHOP, using HRAs, or buying directly from insurers, each offering different benefits tailored to both employer and employee needs. |
Learn More: Health Sharing for Small Businesses
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High Deductible Health Plans
High Deductible Health Plans (HDHPs) feature higher deductibles and lower monthly premiums than traditional plans, saving money for both employers and employees.
The higher deductibles require workers to pay more out-of-pocket costs upfront. But they can offset these expenses by contributing pre-tax to health savings accounts (HSA)s for qualified medical expenses.
Why Offer HDHPs?
Lower Premiums:
HDHPs have lower premiums than comparable traditional health plans.
Consumer-Driven Care:
Higher deductibles prompt employees to choose cost-effective healthcare options and make informed decisions about their medical care, potentially reducing overall healthcare spending.
Savings for Employees:
Those with fewer health needs benefit from lower premiums and can grow their HSA funds, providing a financial buffer for future or unexpected medical costs.
Learn More: How Much Can an HSA Save in Taxes?
Why Offer HDHPs?
Lower Premiums:
HDHPs have lower premiums than comparable traditional health plans.
Consumer-Driven Care:
Higher deductibles prompt employees to choose cost-effective healthcare options and make informed decisions about their medical care, potentially reducing overall healthcare spending.
Savings for Employees:
Those with fewer health needs benefit from lower premiums and can grow their HSA funds, providing a financial buffer for future or unexpected medical costs.
Learn More: How Much Can an HSA Save in Taxes?
Considerations
HDHPs aren’t ideal for everyone. Employees with chronic conditions or frequent medical needs may struggle with the high deductible, finding a conventional plan with a lower deductible more suitable to avoid skipping necessary care due to costs.
A Personal Benefits Manager can help tailor a selection of health plans to fit various employee needs and preferences.
Why HSA for America?
HSA for America is one of the only health benefits brokers in the country able to talk to small business owners about all your options, including traditional group health insurance, HDHPs, HSAs, direct primary care plans, HRAs, ICHRAs, QSEHRAs, and health sharing plans.
Our Approach
We’re big believers in entrepreneurship, innovation, and healthcare freedom.
Many of our Personal Benefits Managers are experienced employers, successful business owners and entrepreneurs in their own right, who have exited their businesses and are now pursuing a second or third career advising business owners.
Our Process
Our process is consultative: We survey the specific plans and benefits available in your particular area… or wherever you have employees.
We work closely with owners and their HR teams to help them choose the best possible plan – or combination of plans – to suit the needs and budgets of both individuals and employees.
Your Personal Benefits Manager - The HSA for America Difference
Every business is assigned a permanent Personal Benefits Manager, who will be your point of contact going forward.
You will always have direct access to your Personal Benefits Manager, so any time you have questions or need to add or remove an employee, they are just a call or email away.
For more in-depth information on what sets us apart for small businesses, click here to read more about HSA for America.
HDHPs aren’t ideal for everyone. Employees with chronic conditions or frequent medical needs may struggle with the high deductible, finding a conventional plan with a lower deductible more suitable to avoid skipping necessary care due to costs.
A Personal Benefits Manager can help tailor a selection of health plans to fit various employee needs and preferences.
Why HSA for America?
HSA for America is one of the only health benefits brokers in the country able to talk to small business owners about all your options, including traditional group health insurance, HDHPs, HSAs, direct primary care plans, HRAs, ICHRAs, QSEHRAs, and health sharing plans.
Our Approach
We’re big believers in entrepreneurship, innovation, and healthcare freedom.
Many of our Personal Benefits Managers are experienced employers, successful business owners and entrepreneurs in their own right, who have exited their businesses and are now pursuing a second or third career advising business owners.
Our Process
Our process is consultative: We survey the specific plans and benefits available in your particular area… or wherever you have employees.
We work closely with owners and their HR teams to help them choose the best possible plan – or combination of plans – to suit the needs and budgets of both individuals and employees.
Your Personal Benefits Manager - The HSA for America Difference
Every business is assigned a permanent Personal Benefits Manager, who will be your point of contact going forward.
You will always have direct access to your Personal Benefits Manager, so any time you have questions or need to add or remove an employee, they are just a call or email away.
For more in-depth information on what sets us apart for small businesses, click here to read more about HSA for America.
Request a Group Quote for Your Company
Get Started Now
Every step of our process is easy and hassle free:
We begin by working with you to prepare a census of the employees you may want to cover.
We discuss what is important to you, and your employees so that we can construct the right program.
We then review all available plans in your area based on the understanding we gained in step 2, above. This could include small group plans, self-funded plans, or individual plans in conjunction with an HRA. It may include healthshare plans or DPC memberships.
We provide you with a quote or quotes, and an explanation of the pros and cons of any strategies we recommend.
We’ll then discuss it, answer your questions, and make adjustments if needed.
We begin by working with you to prepare a census of the employees you may want to cover.
We provide you with a quote or quotes, and an explanation of the pros and cons of any strategies we recommend.
We discuss what is important to you, and your employees so that we can construct the right program.
We’ll then discuss it, answer your questions, and make adjustments if needed.
We then review all available plans in your area based on the understanding we gained in step 2, above. This could include small group plans, self-funded plans, or individual plans in conjunction with an HRA. It may include healthshare plans or DPC memberships.
If you like what you see, your Personal Benefits Manager will help you help your employees enroll, and get your plan underway. This is a fast, streamlined process that eliminates all administrative hassle on your end.
To get started, schedule an appointment with a Personal Benefits Advisor or request a quote for your company.
More Resources for Business Owners and HR Professionals
The Complete Guide to Health Sharing
The Small Business Owner’s Guide to Establishing Section 125 Cafeteria Plans
Health Care for Small Businesses: The Best Strategies for Employers With 2 to 20 Full-Time Employees
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