For small business owners, health care costs are an extremely important consideration when planning operating costs and budgets. Small businesses often struggle with attracting and retaining top talent if the cost of benefits becomes a burden — for both the employer and employees. Understanding your options allows you to find the best solution available and to ensure the lowest costs possible. To make an informed decision about the best option for your business, it’s important you understand the associated costs as a small business owner.
While overall operating expenses are defined by individual businesses, health care costs can play a significant factor in budgeting necessary funds to cover these expenses. Since plans and pricing vary greatly by state, it’s impossible to specifically identify costs associated with small business health care plans. However, there are options available to assist small business owners while keeping health care affordable for everyone.
While forecasting health care costs for your small business isn’t an exact science, The Balance estimates that employers will spend between $2,000 and $9,000 per year, for those employees earning a yearly salary of $50,000 or more. Again, these costs can vary by state, and are dependent upon the features of the health plan selected.
Group Health Insurance Options
FitSmallBusiness.com explained that group health insurance can be a more viable option for companies with employees in higher tax brackets. With this option, both employer and employee can use pretax dollars to pay for coverage. In addition, there’s no payroll tax for employers and employee contributions aren’t subject to income tax.
Reducing Health Care Costs
Regardless of the best available option to you, there are measures that can reduce the higher costs of employee health care in the long run, such as:
- Offering wellness and incentive programs to not only help employees get healthy but stay that way. A healthy workforce may result in reduced sick days, doctor’s visits and additional medical care.
- Providing tax-exempt health savings accounts for employees to reduce overall company costs related to health care and to provide employees with additional monies to cover copay balances, prescription and over-the-counter medication and related health care expenses.
Work With Your Advisor
Your plan advisor is an integral part in determining the best – and most reasonable – health care option for your business. Be sure to share the features and options that are most important to your organization and employees, and be flexible about the plans that are available.
It’s important to look at your company and its workforce as a whole. The number of full-time employees, average salaries and specific needs required by your organization will help you make an informed decision that works for everyone involved.