Small Business Health Insurance - How the Self Employed Can Afford Insurance Coverage

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.