Don’t Go for Broke! – Healthcare Options for the Small Business Owner

Posted on: July 21, 2020

While offering healthcare is not required for companies with fewer than 50 employees, it is the number one most sought after benefit for most job hunters, and remains one of the most popular benefits businesses seek. Though important, many small business owners also know that the price tag attributed to healthcare can be prohibitive. When it comes to healthcare benefits, we advise you to look deeper into the options available to you, and specifically the ones extended to small businesses. In this blog post, we’ll take a look at how you can offer health benefits (and save money!) at the same time.

Choose the Right Plan

As a small business, you have a wide variety of options available. It can be a little overwhelming to sift through all of them, so let’s explore the differences between the main types of insurance you can offer:

  • QSEHRA: the qualified small employer HRA is for businesses with 50 employees or fewer. For a monthly premium, you will receive a monthly allowance of tax-exempt money. Your employee enrolls in a health insurance plan of their choice and then you use the allowance to reimburse part of their premiums. You will have a contribution limit.
  • ICHRA: the individual coverage HRA is similar to the QSEHRA except there is no contribution limit and no company size limit. However, employees must be enrolled in their own policy, not in a spouse’s policy.
  • GCHRA: group coverage HRAs allow companies to choose inexpensive healthcare plans and supplement them with a reimbursement fund that helps employees pay high deductibles and copays. The money set aside for the reimbursement is tax-exempt.
  • Self-Funded: with this option, you skip the insurance plan and provide your own “insurance” to your employees. As needs arise, employees pay out-of-pocket and then file a claim with you to reimburse those costs. You establish your own eligibility requirements and coverage limits. Then, you set up a trust fund that both you and your employee contribute to. Instead of paying monthly premiums, you make monthly contributions to this fund and then use it for healthcare costs as needed.

Don’t Forget to Claim Your Tax Benefits

In addition to shopping around for affordable healthcare options, you can save money by taking advantage of the tax benefits that you qualify for as an employer that provides health insurance. Come tax season, here are some benefits you can claim:

  • Any health insurance premiums you are required to pay are tax-exempt.
  • Any contributions you make to the premiums your employee has to pay are tax-deductible.
  • You can set up a Section 125 premium-only plan so that your employee’s share of the premiums come out of their pre-tax income which will lower payroll taxes for you and your employee.
  • Businesses with 24 employees or fewer qualify for the small business health care tax credit which covers up to 50% of your contributions.

Don’t let the presumed price tag of healthcare scare you away from looking into your options. Healthcare benefits can help keep your company competitive while hiring, and retain employees who may see not implementing a policy as a dealbreaker, all while remaining affordable for even the smallest of businesses. Need more guidance on which policy to explore? Contact us today and we can help you navigate which choice works best for your business.

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