|February 2021||Maximize your HSA e-Newsletter||Vol. 17, Issue 2|
Two Ways to Offer Health Benefits to Your Employees … Without Buying a Group Plan
Group Health Insurance Can Be Prohibitively Expensive for Small and Medium Sized Businesses … Here are Two Valuable Group Insurance Alternatives
For most small business owners, group health insurance plans are not seen as something that makes money. Rather, health benefits are just another bothersome expense … a necessary hassle if you have any hopes of attracting good employees.
But what if there was a way to offer health benefits to your employees without having to deal with a group plan?
With Small Business HRAs and Employee Healthshare Plans, business owners can give their employees affordable, flexible access to health benefits. In the meantime, they’ll be reaping a few big benefits of their own.
Q: Does my business need to offer health insurance benefits?
Under the ACA, small businesses with 50 or fewer employees do not need to offer health insurance. In fact, even large companies are not forced to offer health insurance. Rather, businesses with more than 50 employees who do not offer insurance simply pay the IRS no-coverage penalty.
But here’s the thing: Employee health benefits are about a lot more than just the tax breaks. Employee Health benefits are directly responsible for:
- Attracting new employees and top talent
- Reducing employee turnover (and HR costs)
- Encouraging a healthier, more productive workplace
The problem with traditional group health insurance plans
Simply put: group health insurance is too expensive for many businesses. This is especially true of small family companies with only a handful of employees, or ambitious upstarts who are working with a shoestring budget.
In addition to being too expensive, group health insurance is remarkably constricting. Most employers only offer one or two plan options, forcing workers into plans that aren’t a good fit. Simply put, group insurance is just not flexible enough to meet the everyone on your team.
Fortunately, group health insurance plans are not the only way to give your employees access to valuable health benefits.
The two best alternatives to employee group health insurance plans:
Health Reimbursement Accounts (HRAs) and Small Group Healthshare Plans are the two most viable alternatives to traditional group plans.
In addition to being more affordable both HRAs and Group Healthshare Plans have some unique features and benefits that traditional plans do not.
Employee Health Reimbursement Accounts (HRAs): What is an HRA?
Health Reimbursement Accounts (AKA Health Reimbursement Arrangements) are a way for employers to reimburse their workers for the cost of health insurance.
Instead of buying the same group plan for everyone, HRAs allow employees to enroll in the plan that they want. Then, the employer chooses how much to contribute each month towards the cost of that insurance.
In most cases, the employer sets a flat-rate contribution that is used exclusively to reimburse plan premiums. But because employers make all the rules, HRAs can also be set up to reimburse the cost of vision, dental, and more.
Pros & cons of an employee HRA:
|Employers can choose how much to contribute (No contribution minimums)||Employees must enroll in individual coverage insurance to benefit from an HRA|
|Contributions are tax deductible for both employer and employee||Some HRAs can disqualify an employee from receiving the ACA subsidy|
|Employees get to choose their own plans, and can stay with their plan even if they leave the company|
Group Healthshare Plans for employees: What is a group health sharing plan?
Health care cost sharing (or simply Healthshare) is rapidly emerging as one of the most effective cost-saving options available to small employers.
Group health sharing plans are not technically insurance, but they do work similarly. These plans let members “share” the cost of health expenses, by paying into a monthly membership. Any time a qualified medical expense is incurred, the plan “shares” the cost via reimbursement payment.
Health sharing plans cost less per-month that any other health benefit around. However, this low-cost is only possible because the plans tend to be a bit more restrictive. Specifically, many group healthshare plans have 1- or 2-year waiting periods on pre-existing conditions.
Pros & cons of Group Healthshare Plans for employees:
|Group healthshare plans are cheaper per-month than insurance||Health sharing plans are more restrictive, and have waiting limits on pre-existing conditions|
|Health sharing plans don’t generally have network restrictions … Members can choose the doctor or facility that they like||Employer contributions to healthshare plans are not tax deductible|
|Some group healthshare plans are HSA-qualified, significantly boosting their overall value|
|There’s no minimum enrollment requirement|
Learn more about your small business health insurance alternatives
If you’re ready to get an HRA or Healthshare Plan for your employees, you should start with a call to your Personal Benefits Manager. Our experts can help you find the option that lines up with your company’s current and projected needs.
Also, our blog is a great resource for small business owners who are looking for a way to afford employee health benefits. You can read more about HRAs, health sharing, and employee HSAs in our comprehensive guide: Health Insurance for Small Businesses: The Only Guide You’ll Ever Need.
Click here to schedule an appointment, or call 800-913-0172 to get started.
To your health and wealth,
Wiley P. Long, III
President - HSA for America
The HSA for America Maximize Your HSA Newsletter is published monthly and emailed to subscribers at no charge. Subscribe now to stay on top of the critical information you need to know about health insurance, healthshare plans and managing your finances to achieve financial security.
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