Game changer: Why one small business got on the benefits bandwagon
You want to offer your employees health insurance, but you're not sure if you can afford it. You're not alone.
According to a recent study by the National Small Business Association, the average monthly per-employee cost of health insurance premiums is $1,121.I Multiply those average premiums by 10 or 20 employees and that's likely a significant portion of your business' annual revenue.
Although small businesses with fewer than 50 full-time equivalent employees are not required by law to provide or pay for health insurance for their workers, that same survey found that 51 percent of companies with fewer than five employees offer some level of health benefit.
As one company we talked to explained, benefits can be a game changer when it comes to attracting and retaining the best, especially for smaller companies looking to stay competitive.
Benefits help retain the best
“I couldn't afford not to offer it," explains Patrick Lee, president of Shorecrest Construction, Inc., in Miami, Florida. “We wanted 'A' players," says Lee.
Lee has fourteen employees, and when he decided to offer them all health insurance coverage, he considered two options:
- Co-employment through a Professional Employer Organization, which handles some human resource-related services, such as compensation, insurance and retirement programs.
- Buying direct from health insurance companies: Working through a health care broker or agent, to purchase coverage for employees.
Co-employment was attractive because Shorecrest's employees would gain access to other benefits, such as a 401(k). But in some instances what PEOS offer may be restricted by the state. In Shorecrest's case, he couldn't find a PEO in Florida that offered workers compensation, and that was a deal breaker.
Employers are increasingly chipping in
There’s a lot to consider when buying group health insurance. Affordability is important. Take a page out of Lee’s playbook and look beyond the premium when comparing plans; it’s only one item among many variables, including networks, copays, coinsurance, and deductibles.
You can get a feel for average premiums industry-wide and the employer/employee cost split from organizations such as the Kaiser Family Foundation (link opens in new window). For instance, the average annual premium for employer-sponsored individual coverage was $6,251 in 2015, with employers covering 83% of the premium.II
Just because a business is small, doesn't mean it can't compete when it comes to taking care of its employees.
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