Small Business Health Insurance - How the Self Employed Can Afford Insurance Coverage
April 18, 2008
Providing small business health insurance for yourself and your employees is a strain on many businesses. Some business owners just can’t afford it and feel like not offering insurance is simply the only option. Yet, with more pressure from the government and some areas now requiring that employees be given health insurance, finding a solution to allow you to pay for this cost is necessary.
Risks Of Not Providing Health Insurance
One of the largest risks any employer takes when they don’t provide health insurance to employees is losing those employees. As the costs of health care rise, more people than ever simply have to have health care coverage. Therefore, people often leave one job to go to another where they can secure health insurance to protect themselves.
The Benefits Of Insuring Employees
Group Health Insurance
The good news is there are options available that can help most small business owners provide health insurance. First, realize what the government considers a small business in terms of health insurance. A business with between two employees and 50 is considered to be a small business. Most often, if you have one employee, providing small business health insurance will be cheaper than the two of you getting individual health care plans. When you have a group like this, you’ll have lower premiums and you’ll have a more expansive coverage.
Tax Deductions
In addition to this, most businesses will qualify for tax deductions from the federal government (as the employer) for their contributions to small group health insurance. Often times the portion of the employee’s health insurance plan that you are covering is tax deductible for the business. Therefore, it is often advantageous to actually get some type of plan in place.
Employee Retention
In addition to the business reasons, offering a health plan, even if your business does not pay for much of it will help your employee retention and your employee satisfaction rates. Sometimes something as simple as having the option available can cause employees to be more content with where they work. Employee retention can lead to better productivity, which has an impact on the bottom line and can potentially make the cost of insurance a little more feasible.
Strategies for Reducing Employer Insurance Costs
Increase Employee Payments
If you have a health insurance policy in place for your employees, and you simply can’t make the required payments, you have some options, though limited. You can rework the program with your insurance company to have employees pay more of the costs than they are currently paying. There are options available to small businesses that will offer health care plans for their businesses for as low as $250 per month on the part of the employer. Although this will reduce the investment you specifically have to make, it may not sit well with your employees.
Price Shop
Another option you have is to do some shopping around. Many small businesses benefit from changing insurance companies every few years. Introductory prices are often lower. This is an option for you, but it can also hurt employee morale, especially if their current doctor isn’t available on the plan.
Offer a Health Savings Account
Finally, you may wish to go with something all together different. The HSA is an option for small businesses looking for an alternative to traditional health care. HSA, or Health Savings Accounts, are designed to allow employees reduce the amount of money they have to pump into health insurance. This plan is a consumer directed health coverage plan that allows for a high deductible and provides for tax free savings. Employees and employers can contribute to the set amount. The funds are used to pay for medical expenses by the employee.
Look at the facts. According to The Kaiser Family Institute and The national Association of Health Underwriters, health care costs have risen 15 percent in the last five years, each year. The current cost of insuring an employee is $700 a month. 47 percent of small business owners no longer provide health care to their employees due to this. The HSA is an alternative solution for many of these businesses.
Finding Affordable Health Insurance for Your Business
As you consider health insurance as an option for your small business, start with considering the types of employees that you have and whether this is something that they expect and could afford to pay for if they were offered the option.
Next, consider the financial benefits and costs to your business if you choose to offer health insurance. If you decide that you would like to move forward, be sure to quote multiple health insurance providers so that you can find the best match for your small business.
Can You Afford Dental Insurance as a Small Business Owner?
March 31, 2008
One of the hardest challenges initially for many new small business owners is the lack of their formal corporate benefits package. While there is substantial information available on self employment health insurance plans, it can be hard to locate information on dental insurance for small business owners. If you are interested in locating affordable, quality dental insurance as a small business owner, there are several options available to consider.
Is Dental Insurance Worth the Cost?
The first major consideration for you and your family when evaluating dental coverage is the cost benefit of having dental coverage. Most healthy individuals see their dentist once or twice per year for annual x-rays and routine teeth cleanings. One thing to always consider when you are evaluating the purchase of any type of optional insurance is the cost benefit ratio. What is the annual cost of the insurance versus any annual benefits that you will receive?
Dental Care Expenses
Assuming that you are a healthy person without prior dental issues, your estimated annual dental costs if you were to pay out of pocket would be between $300-$400, including two annual cleanings and one full round of x-ray’s. If your insurance were only to be $10 per month or near that price, you may make the decision to apply. If the dental insurance is more expensive, most small business owners will elect to pay out of pocket for any incurred expenses. But, what if you have dental issues outside of the normal preventative care? What if you require fillings or crowns which can run upwards of $500-$1000 each?
Discount Dental Plans
Dental issues are the primary reason that business owners consider dental discount plans. Dental discount plans provide a discount on almost all dental needs, including the more expensive procedures. Dental discount plans are not insurance. They only provide discounts on routine and specified dental procedures, requiring the person with the dental discount plan membership to pay the discounted costs out of pocket at the time of use.
How Do Dental Discount Plans Work?
The dental discount plan members will pay a small fee to be a member of the plan and they will be able to use their discounts at participating plan dentists. Just like a health insurance company, each dental discount plan will offer various features and benefits. As a business owner, you will need to compare rates, plans, available access to dental care providers and the overall discounts that are provided and for which services. The most important factor when you are considering joining a discount plan is your overall estimated dental care needs on an annual basis.
How To Find Discount Dental Plans
To start your dental discount plan search, you will need to know where to look. One of the first things to do is to call your existing self employed health insurance provider. Many health insurance companies that offer insurance to self employed business owners also offer dental plans. Beyond your current health insurance company or if you have not yet applied for health insurance, there are several companies available that will help provide you with information and quotes for dental discount plans.
Beyond your current health insurance company, there are several dental discount plan providers that will offer you information and quotes. Start your search with DentalPlans.com and All Care Advantage, they will help you locate specific companies in your region that provide dental discounts.
Once you have located several dental discount plans, you will need to compare and contrast their features and benefits to make a selection. If you have a family, be sure to also include those costs as well. While there are very limited amounts of traditional dental insurance plans available for self employed individuals, dental discount plans may provide an affordable alternative, providing a method to cover the more expensive dental procedures, ensuring that you and your family can afford necessary dental care, even when you are self employed.
Health Savings Accounts - Cutting Health Insurance Costs for the Self-Employed?
March 19, 2008
How can a Health Savings Account (HSA) reduce health care costs for your small business?
When combined with a high deductible health plan, an HSA can lower your monthly premiums and give you several thousands of dollars worth of tax breaks each year.
Higher Deductibles, Lower Monthly Premiums
Health Savings Accounts go hand in hand with a type of health insurance policy called high-deductible health plans (HDHP). The name is kind of scary, who wants to risk paying high deductibles? Well, there’s a good reason why HSA’s are tied so closely with high deductible plans.
As you well know, in the insurance world higher deductibles result in lower monthly premiums. So you save money on insurance premiums each month by accepting the risk of having a high deductible. This is where a health savings account comes into play, it helps reduce the financial risk of paying increased insurance deductibles.
Health Savings Account Tax Breaks
If you’re enrolled in a high-deductible health plan and an HSA then you can contribute the dollar amount of your deductible into your HSA each year. So although there’s a risk you may have to pay the entire insurance deductible, you can make payments for it out of your HSA, all of whose contributions are tax deductible when calculating your adjusted gross income. Let look at an example:
If your annual insurance deductible was $2500, you could put $2500 into your health savings account. That contribution is tax deductible whether you spend any of it or not, whatever amount you don’t spend simply accrues in your account.
That’s one of the great features about HSA’s, the money you put in can grow tax-deferred and can be used anytime for medical expenses. Any amount you don’t spend can be used penalty-free after age 59 1/2 for retirement.
Lowering Health Insurance Costs
So if you’re wondering if health savings accounts can save your small business money, the answer is, it depends…..
For healthy people with minimal health care expenses that are mostly interested in catastrophic coverage, a health savings account coupled with a high-deductible health plan is a great way to lower your costs and build up your health care expense fund. If you’re faced with high medical bills year after year due to recurring health care issues then a health savings account is probably not for you. So what about people in between those two extremes? Check back for a later article covering additional considerations and benefits of health savings accounts.
