Small businesses can find it hard to attract and retain high-quality employees when competing against companies with a benefits package
Even though there is a wide range of options, with a limited budget, it is vital to be strategic. Most employees look for some type of health insurance funding. We tend to think of a health plan as one that operates within a large entity, like Blue Cross Blue Shield. For many small businesses, not only are these plans out of reach financially, they require a minimum number of participation by your employees.
So, what’s an awesome business owner (like you) to do?
Here are two interesting alternatives now available — you can consider offering to your employees that don’t have to break the bank.
Alternative 1: Healthshare Ministry Plans
Medical cost-sharing, or health sharing ministries, are a group of like-minded individuals that agree to come together and help each other pay their medical expenses. They offer faith-based programs to plan for unforeseen medical expenses. Since it is not health insurance, there are fewer rules. For instance, since there are no network requirements, you can go to whatever doctor you like. If you visit a doctor that does not take this plan, health sharing programs do pay in cash. That means you can always get reimbursed, if you choose to stay with that doctor and pay out of pocket.
How do they work?
Everyone pays in a certain monthly share amount, there is a relatively small annual out of pocket cost, and the plan pays the rest. As an employer, you can decide how much to split the amount of the monthly premium with your employees. Some employers will pay 100%, other companies may do a 50/50 cost-sharing.
Are there restrictions?
Yes. Since they are faith-based ministries, there are often different guidelines. Such as no coverage for smokers or limits on certain pre-existing health or lifestyle-related conditions. In which case, they will decline membership or require that these conditions always be out of pocket costs.
A resource for this type of plan in our local area is Charlotte Healthshare.
Alternative 2: A Qualified Small Employer Health Reimbursement Account (QSEHRA)
A QSEHRA is a qualified small employer health reimbursement arrangement. It is a health coverage subsidy plan designed for employees of businesses with fewer than 50 full-time employees. The money reimbursed is tax-free for employees and is tax-deductible by employers.
How do they work?
The business decides how much to make available as reimbursement per employee per year. Working with a third party administrator, employees submit requests for reimbursement for their medical expenses. The plan administrator approves the requests and advises you on the amount to reimburse which can then be paid through your payroll process.
The plan can be used to offset health insurance premiums or repay uncovered medical expenses. In tax-year 2020, a company with a QSEHRA may reimburse single employees up to $5,250 per year, and employees with families up to $10,600 per year. A business does not have to offer this maximum amount, it can choose to allocate whatever fits the benefits budget.
Are there restrictions?
To qualify to use a QSEHRA, a business must have fewer than 50 full-time employees, provide the QSEHRA on the same terms to all full-time workers, and not have a group health plan or a Flexible Spending Arrangement (FSA).
Unlike traditional benefits that attempt to provide a universal solution for the group of employees
A personalized approach enables small businesses to offer true benefits, customized to the unique needs of each employee — all at a cost determined by the company. With this approach, the benefits expectations of employees are met in ways that are much more manageable for the employer — leveling the employee benefits playing field for small employers.
Conclusion – What are the best benefits for employees?
Benefits matter to employees. Recent studies suggest employees of small businesses choose and stay with companies because of the benefits they offer, and yet employees crave benefits with increased value and choice. The two options above help small businesses offer this highly valued health-related benefit.
Kate Wells is an experienced small business owner and HR expert. She works as Chief HR Officer for small and startup businesses who need HR expertise without the HR employee overhead. Her greatest joy is in setting employers and employees up for success. Knowledgeable in the ways of business and people she is a consultant who rolls up her sleeves and gets stuff done, while also acting as a trusted sounding board for business owners. Kate has two adult daughters, a lifetime sweetheart, and enjoys hiking, road biking, learning, reading, jigsaw puzzles, and the magic of Harry Potter.
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