Once you’ve explored health insurance options for your employees, you may decide that buying group coverage is simply not an option for your company at this time. Many employers are unaware that group insurance policies have strict requirements, conveying that at least 70 percent of staff members get coverage.
In such a scenario, it’s hardly surprising that workers are abandoning their companies’ policies in favor of options like sharing ministries and short-term personal plans. While these options may be useful to employees, they often harm business entities.
Fortunately, there are alternative arrangements that may protect your personnel at little or no cost to your firm. Below is a closer look at your options:
1. HSA (Health Savings Account)
An HSA (health savings account) can help companies provide medical coverage while providing tax benefits. Employees who leverage this option can combine it with a deductible plan to pay for chronic injuries or illness.
Funds deposited into a health savings account are pre-tax deductions, and there’s no fine on withdrawals or savings as long as the money is used to cover healthcare costs. However, the IRS has a cap on the funds deposited into an HSA account. The yearly limit in 2018 was $6,900 for families and $3,450 for individuals.
2. QSEHRA (Qualified Small Employer Health Reimbursement Arrangement)
QSEHRA is a personalized health benefit that is a lucrative option for SMBs as it eliminates many of the obstacles associated with offering employer health insurance, such as minimum contributions, necessary enrollment, and high costs. Employers can set up a QSEHRA to give personnel a “monthly medical allowance.” Staffers can shop an individual health insurance plan through a public or private exchange, or an independent insurance provider.
Eligible personnel may also get discounts on insurance premiums if they coordinate with HRA benefits. Anything listed by the Internal Revenue Service as a healthcare dedication is eligible for reimbursements, up to the figure the company determines. SMBs can contribute any figure, up to yearly federal limits of $10,000 for personnel with a family and $4,950 for single workers.
3. Bronze health insurance plan
Per the Affordable Care Act, insurance plans are categorized into 4 “metal” groups, with bronze being the initial group and platinum being the last. Insurance plans that come under the bronze category are the least expensive to purchase and carry a high deductible – the figure that needs to be paid by the insured from his or her pocket before insurance coverage kicks in.
For some personnel, bronze plans can be a good option. The premiums are low and, in case of an emergency, coverage is available. For small companies struggling with the expense of employer-offered health insurance, these plans can be a blessing in disguise. Depending on factors like baseline salary, companies with fewer than 25 people may qualify for tax credits to offset some of the cost.
4. Healthcare sharing ministry
In general, healthcare sharing ministries are faith-based expense-sharing programs. Members sharing religious sentiments contribute a specific dollar figure each month to their own savings. When someone needs help paying healthcare expenses, they submit a request to the ministry and the members decide whether to approve the demand. Once the request is approved, the sum is paid from other members’ savings contribution.
These ministries, which include organizations like Liberty Healthshare and Medi-share, aren’t considered as providers of insurance, but their members are excused from the ACA’s individual mandate. Also, these organizations often secure discounts from hospitals and general care physicians to keep costs low. In other words, sharing ministries’ programs work much like a typical employee health insurance policy at an overall affordable level.
5. No insurance
The last alternative to employee health insurance is to offer nothing to personnel. Businesses usually go down this route when they cannot afford a traditional health insurance plan. Some take up this option because they aren’t aware of the fact that independent health insurance reimbursements are applicable on a tax-advantaged basis. Others may be at a tipping point where the advantages of not offering insurance simply outweigh the disadvantages.
With that said, those who are uninsured can still be reimbursed under an organization’s QSEHRA. Reimbursements for eligible expenses will be free of a payroll tax, but income tax will be levied. Younger employees in good health who do not expect to incur a lot in healthcare costs may be good candidates for a high-deductible, low-premium plan that covers unexpected illnesses or injuries.
To conclude, employee health insurance plans are not a “do or die” proposition for businesses. There are ways to keep costs low while allowing employees to obtain the healthcare benefits they need. With one or a combination of the alternatives mentioned above, companies can offer a benefits package to both attract and retain qualified employees.