I don’t need to tell you that finding and retaining top talent is a challenge in this era of low unemployment. Not only are we small businesses competing for talent against other small businesses, but large corporations as well.
Needless to say, a main way to do it is to offer a good benefits package, and that must include quality healthcare.
But offering a good healthcare plan is sometimes easier said than done. As we all know all too well, healthcare costs keep rising, begging the question: How do you keep costs down while still making employees happy and also turning a profit?
No small task, that.
But it must be done.
So, to help you, here are four ways you can reduce your small business healthcare costs.
1. Offer a narrower product
The essential rule for healthcare costs is that the more options you offer, the more it will cost. As such, it makes sense that narrowing the options in your plan – fewer doctor choices and a tighter network – will help keep costs down.
I recently hosted a series of short healthcare podcasts for United Healthcare and one of our shows dealt with this very topic. My guest was a UHC cost specialist, Robert Horton. Robert explained that a narrower network can save an average of 3%, which is not insignificant.
2. Offer a high-deductible plan
Another option that small business owners utilize quite often is a high deductible plan. A high-deductible healthcare plan (HDHP) is as it sounds – in exchange for lower monthly premiums, the covered employee agrees to pay more out of pocket when the time comes to actually see a doctor. Once the deductible is met for the year, most things are covered; that’s why so many people end up getting expensive tests done late in the calendar year.
High deductible plans are good when you have a young and relatively healthy workforce; they care less about the high deductible as they use the coverage lees.
While raising the deductible amount is not ideal (none of the ideas are, but that is the state of the system we are in) at least this way you can still offer healthcare coverage.
3. Offer a Health Savings Account
Health savings accounts are a simple way for small business owners to provide healthcare coverage at a lower cost. HSAs are akin to an IRA or a personal savings account, except that the funds are earmarked for healthcare costs.
“A health savings account (HSA) is a pre-tax savings vehicle for people who have high deductible health insurance plans (HDHP) and want to set aside pre-tax dollars to pay for medical expenses. An HSA reduces employees’ out-of-pocket costs and lowers their year-end tax liability. It also reduces employer payroll taxes.”
Accordingly, to qualify for an HSA, you must already be enrolled in a HDHP. With an HSA, your payments are tax-free as long as they go towards qualified healthcare associated costs.
This type of plan is also really good for the microbusinesses and the self-employed who need more financial flexibility and lower insurance costs. (This is what I use, for example.)
4. Offer wellness incentives:
Small business owners know what it means to think outside of the box. There is no better way to think outside the box in terms of healthcare-associated costs than by offering wellness incentives.
Wellness incentives can be anything ranging from gym membership discounts or incentives for activity like riding a bike to work or bonuses based on proven participation in the wellness programs.
A well-designed wellness incentive plan is a win-win for both employers and employees: not only does help employers with healthcare costs (insurance companies look kindly on these sorts of programs), but also, they encourage employees to live well while also promoting a strong company culture.
Ultimately, there are many ways for your business to reduce healthcare costs. These are just a few options that might work for your small business.
About Steve Strauss
Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business Success.© Steven D. Strauss
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