Health insurance is one of the top benefits valued by employees across the US. Businesses that want to recruit and retain top talent in their industry have to offer high-quality health benefits. There are many different options that you can choose from when enrolling in a health insurance plan for your workers. Such as health reimbursement arrangements, employee stipends, and group health insurance.
How does employer health insurance work?
Almost 50% of civilian employees took part in a medical care plan in their workplace in 2022. Generally, new employees get access to benefits after their probationary period is over. Your employees can apply for or get their benefits changed during the open enrollment, which usually starts on November 1 and ends on December 15. However, this varies according to the company. You should choose a timeline that best fits you and your employees’ needs. You can also grant special enrollment if an employee is going through a significant life event, such as losing their health coverage from their spouse, divorce, or having or adopting a child.
The premium of the insurance coverage is usually deducted from the employee’s pay at the end of every pay period.
Small-group health insurance
Most employers generally offer employer-sponsored health insurance coverage. Any organization with more than two and less than fifty employees working full time is allowed to enroll in a small group health insurance plan to help their employees. This plan covers a wide variety of essential health benefits as outlined in the Affordable Care Act.
Pros and cons
Due to the popularity of this type of health insurance, you’ll find that most of your employees are already familiar with how it works. You can save the time and effort of educating them about how it works. It also makes it easier to purchase a policy with the help of an insurance broker. Brokers are usually very knowledgeable about different types of insurance policies and can aid you throughout the enrollment process.
Employees can also benefit from cost-sharing their monthly premiums with your business. There is a 50% employer contribution that’s required by this form of insurance, but many companies pay even more.
One major downside of this traditional form of health insurance is that it’s not tailored to your company’s needs. Its plans are rather one-size-fits-all, and you choose the same insurance for all your employees, regardless of their age, health, and risk. This means that your employees might not get a proper fit for their unique needs and don’t get a say in the network they want or the premium they’ll need to pay.
Health reimbursement arrangement
Health reimbursement arrangements are employer-funded, IRS-approved health benefits often used for reimbursing employees for premiums on individual health insurance or medical expenses.
HRA’s provide small business employers the benefit of controlling the costs of their benefits by setting a budget. Employers can set aside a certain sum of tax-free cash as a monthly allowance to reimburse employees for their healthcare purchases or premiums.
Pros and cons
The best part of an HRA is that it’s extremely affordable. It allows you to make the decision regarding the amount of money that you want to offer to your employees, which gives you a reliable fixed cost and annual budget without any rate hikes. If your employees don’t use the allowance, you can also keep the funds as a profit for your organization.
HRA’s are easy to manage and are very inclusive. Whether you have a big or small organization, with a flexible or tight budget, you can find the perfect HRA for your business.
Unfortunately, your employees might be unfamiliar with this model, so you’ll have to inform them about how it works, where they can get individual insurance, and what expenses will qualify.
Some employers offer their employees a salary bonus or raise as a strategy for providing health benefits. This extra money is supposed to informally cover their health needs. Instead of providing increased compensation, you can give your employees a health stipend instead. This provides a monthly allowance to your employees that they can use through a benefits expense card. This stipend can be taxed, but it will ensure that your employees spend their allowance on healthcare rather than other costs.
Pros and cons
This is a great option for small organizations that want to provide health benefits without having to restrict themselves to formal health coverage. The stipends are easy to manage, and you can set your own budget. However, your employees might simply see it as an addition to their wage and not a benefit.
You can also miss out on the tax savings usually associated with contributing to an HRA allowance and will have to switch to another health plan once your business grows.
Get small business insurance services in CA today!
Whether you’re changing up your strategy of providing health benefits or offering them for the first time, it’s important to take the time to understand your options and find a plan that fits your organization’s needs and budget. Putting in the work right now will pay off when you’re able to recruit high-quality and loyal employees through your employee insurance package.
If you’re looking for an insurance agency for small businesses in California, Covered California Certified Agent can help you out! Discuss your needs with our representative and get a quote on our top-notch services.
Reach out to us today by dialing 800-771-7653.