We’re going to give you some advice that most people in our business won’t give.
We routinely talk with small business owners who are interested in setting up benefits for their employees, which usually means they’re looking at group health insurance plans. They want to take care of their employees and know that having benefits will also help with recruiting and retaining good people as their business grows.
The obvious problem, of course, is that group health insurance is complicated and expensive!
The other problem is that, in many cases, offering a group health insurance plan could actually be doing more harm than good to your employees.
The Biggest Problem with a Group Health Insurance Plan
Why do we say your group health plan may be doing more harm than good for your employees?
Obamacare eligibility. Anyone who is eligible for a group health insurance plan through his/her employer is not eligible to receive discounts (“premium tax credits”) in Obamacare. And the vast majority of people are otherwise eligible for such discounts as a result of their household size and income.
In fact, with the expansion of Obamacare subsidies in the American Recovery Act, more people are eligible for these discounts, and the discounts are more substantial for most people.
Most small businesses with a group health plan pay a portion of an employee’s premium (usually 50%), but don’t contribute to the cost of insurance for an employee’s dependents (spouse and/or kids). The result is that the cost can be really substantial — certainly a lot more than they otherwise might find in the Obamacare Marketplace.
So in most cases, your employees could save money if you don’t offer them health insurance.
And here’s one other thing: There really isn’t much, if any, cost savings in going with a group health plan over individual coverage.
Employee Benefit Options for a Small Business
So if you don’t offer health insurance, what can you do?
When we talk to business owners who want to help their employees, we usually start by suggesting dental insurance. Here’s why:
- Price. Dental insurance won’t blow up your budget. Additionally, unlike health insurance, group dental insurance is usually cheaper than what you can buy individually.
- Simplicity. Compared to health insurance, dental benefits are pretty straightforward and easy to administer.
- Usefulness. Your employees will (hopefully!) use their dental benefits at least twice a year, and when they do they’ll be glad to have the coverage.
In addition to a good dental plan, you can easily add a vision insurance plan, group life insurance, or other supplemental options for your employees.
Many companies will help you bundle together dental, vision, and life insurance to provide your employees with helpful, useful coverages at an affordable price. These plans allow you to offer good benefits to your employees while allowing them to still take advantage of the discounted health insurance plans available to most of them in the Obamacare Marketplace.
We have several companies that have found success offering a dental/vision/life bundle to their employees, while bringing us in annually to help their employees find the individual health insurance plans that best fit their unique needs and budgets. It’s a win-win.
If you’re interested in learning more about this approach please contact us!