How to Compare Traditional Health Insurance and Alternatives
Small businesses have been hit hard by the pandemic and may be facing tough decisions on how, and if, they can afford to provide health benefits, including dental and vision, to their employees right now. And with so many Americans relying on employee-provided benefits, it’s important to evaluate all options – you don’t have to choose between traditional insurance and no insurance at all.
Cost-effective alternatives can reduce strain on your budget while still providing employees with quality, affordable health, dental and vision care. Here’s how to compare your options.
Traditional Health Insurance Costs
First consider the cost of traditional insurance. The average annual premiums for employer-sponsored health insurance in 2019 were $7,188 for single coverage and $20,576 for family coverage, with the employer paying 82% of the cost of an individual plan and 62% towards the cost of a family plan, according to the 2019 Employer Health Benefits Survey.
Expensive, yes, but you may get tax credits to offset the cost of offering healthcare coverage to your employees. And certainly, offering a competitive benefits package will help you attract and retain talented people.
Finding Traditional Health Insurance for Small Businesses
Next, look at specific plans. There are five ways to find small group insurance plans, which are available to companies that have fifty or fewer employees.
You can purchase insurance through the Small Business Health Options Program (SHOP) via your state’s or the federal healthcare exchange market (Obamacare). You can also obtain insurance directly from a health insurance company or through a private insurance agent or broker. Typically, an agent works with one healthcare company, and a broker offers plans from several providers. And you can purchase insurance online, at sites that aggregate insurance plans and other healthcare savings options.
Remember to review each plan carefully to ensure it meets your financial needs, as well as the needs of your employees. Consider factors such as the time needed to enroll employees, administer the plan and out of pocket obligations for employees.
Alternatives to Traditional Health Plans
If traditional insurance isn’t the right fit for your business, review alternative options. Two to consider are Health Reimbursement Arrangements (HRAs) and Dental Savings Plans (also known as discount plans) which, are not just for saving on dental. These plans can offer negotiated savings on a variety of healthcare services. So don’t be fooled by the name!
Understanding HRAs
HRAs enable small business owners to provide non-taxable reimbursement to employees for their healthcare expenses, including the cost of individual health insurance. Two of the most popular choices are the new Individual Coverage Health Reimbursement Arrangement (ICHRA) and the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
There are many differences between the two, including tax issues, so it’s important to talk to a financial advisor before choosing a plan. In general, ICHRA may be a good fit if your business has (or will soon have) more than 50 employees, the majority of whom pay for their own health coverage. QSEHRA is for companies with 50 employees or less and has an annual cap that’s set by the IRS. In 2020, the cap was $5,250/year for individuals and $10,600/year for employees with families.
Advantages of Savings Plans
Savings plans are not insurance. Rather, they are an affordable alternative with unique advantages. Members of a savings plan get set discounts – often 10-60% off – and pay the discounted rate directly to a participating practice.
And remember, dental savings plans, for instance, aren’t necessarily limited to discounts at the dentist. Plans offered through large online marketplaces may offer free unlimited telehealth, as well as savings on prescriptions, vision, hearing care, chiropractic treatment and even have wellness perks like discounted gym memberships.
Another big plus, especially if you don’t have a designated HR department, is that these plans are easy to manage. You don’t have to file claims, track annual spending limits, or even administer the plan. It’s essentially a self-serve solution.
Whatever option you choose, helping your employees stay healthy and well is sure to provide big benefits to your business and your bottom line.
Jenn Stoll joined DentalPlans.com in 2003, and now, as a key member of the company’s executive leadership team, she is dedicated to ensuring a platform that will enable consumers to enjoy a compelling online shopping experience. Stoll served as a marketing consultant to DentalPlans.com for two years, as Vice President of Marketing for five years, and President for three years before taking on her current role as the company’s Chief Commercial Officer. Additionally, Stoll is the Chairperson of Consumer Health Alliance (CHA).
Health plans stock photo by Monster Ztudio/Shutterstock
