Stephanie Dwilson

Providing Health Care Coverage: Tips for Small Businesses

Providing health care coverage is vital for a small business. Good coverage can not only attract and keep quality talent, but healthier employees are also more productive. However, despite all the benefits, only about half of the smallest businesses in America currently offer health care coverage, according to a report from the Kaiser Family Foundation (KFF).

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The Benefits of Offering Health Care

With only around 50 percent of small businesses with up to 49 employees offering health care, it appears that many don’t know all of the benefits that come from health plans. Here are just a few of the advantages you’ll see from investing in health care.

  • Tax benefits: Businesses with fewer than 25 employees who also meet other qualifications can get a small business health care tax credit, according to the IRS. The credit may be as high as 50 percent. Even if you have more than 25 employees, most premium contributions for employees and their dependents are deductible as business expenses, HealthCoverageGuide.org explained. There are other possible credits and deductions, so talk to an accountant for details.
  • Attract and keep top talent: You’re more likely to attract top talent when you’re offering a great benefits package. Your current employees are more likely to be loyal if they know you care about their health and are investing in their future.
  • Invest in prevention: When employees have health plans, they’re more likely to take preventive measures that help their health in the long run. This can save you money. RAND noted that one company found that for every dollar it invested in a chronic-disease management program, it saved $3.78 in health care costs. In addition, each employee who smokes tobacco can cost the business $3,400 a year in health care and lower productivity.
  • Greater productivity: Healthier workers are more productive. According to the National Partnership for Women and Families, employers may lose as much as $160 billion a year due to lowered productivity from workers trying to do their jobs while sick.

How to Start a Health Plan

If you haven’t had a health plan before, here are a few tips on what to do next:

Talk to an insurance broker about the types of plans out there for small businesses. Combine a tax-friendly health savings account with a consumer-directed health plan (CDHP), which has higher deductibles and lower premiums. You can also consider a defined-contribution plan, where the employer pays a specific amount into an employee’s health coverage, and employees pay the difference if they want a plan with more options or a lower deductible. You’ll also have to choose between PPOs — which tend to have broader networks and higher premiums — versus HMOs — which have lower premiums, but narrower networks and stricter rules.

Survey your employees about what’s important to them. For example, some may be OK with higher premiums if they can get more coverage and better benefits. Find out if the plans you’re considering cover doctors and specialists they use.

Can your budget cover a workplace wellness program? These plans are good choices to promote healthier living. You can even offer little extras that don’t cost much but encourage healthier living, such as paid-time-off to visit a doctor or discounts to the gym.

Bring an insurance agent over to meet with employees one-on-one and in a group meeting, discussing the options and the benefits.

If you’re on the fence about providing health care coverage, consider how the investment will pay off. You’ll have healthier employees, higher productivity and increased morale. Starting a new plan isn’t difficult. Talk to a health insurance agent about what’s available in your region.

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