Companies must rethink their benefits package in the new environment. With the budgets restricted in these tight economic times, startups need to be more creative in the kind of benefits they offer.
Especially health benefits need to be rethought. Employer-provided plans tend to offer better coverage and lower premiums than the open market. If your team is approaching 50 full-time employees, the time is now – these employers are required by the Affordable Care Act to provide health coverage to employees.
Under the Affordable Care Act, there is a subsidy available for small businesses that provide health insurance to their employees. To qualify, the startup must have fewer than 25 full-time equivalent employees, pay average annual wages below $50,000 and contribute 50% or more toward employees’ self-only health insurance premiums. If eligible, the startup receives a tax credit of up to 50% to offset the cost of the insurance. The tax credit is only available if the employer purchases a small group health plan from their state marketplace.
Health Insurance Offers By Startups
According to the Kaiser Family Foundation, annual premiums for single coverage for small businesses total $6,163, and annual premiums for family coverage total $16,625.
Most small and mid-sized businesses find that offering group benefits, including medical, dental and vision plans, as well as ancillary options like disability or life insurance coverage, helps attract and keep quality talent.
And in corona times, employees are looking for more wide coverage.
The ideal solution is for employers to offer several types of plans, with varying price points and deductibles. This allows team members to choose the type of coverage that best meets their needs. The most common types of health insurance plans include:
- Health Maintenance Organization (HMO)
- Exclusive Provider Organization (EPO)
- Point of Service (POS)
- Preferred Provider Organization (PPO)
The premiums are the highest in the PPO program and POS seems to be the most beneficial.
Remember that health insurance does not renew automatically, and yearly coverage determination is done. Plans, policies, options, and rates change significantly from one year to the next. It’s up to you to decide if you are going to renew the previous year’s coverage at the newly proposed rates and terms or seek other options.
A startup is anyways strapped for cash but to lean on health budget is business suicide. Even if the most basic one needs to work out health insurance, consider what you can sustainably afford for each new hire in terms of the benefits offering and employer/employee cost-sharing.
A good way to compensate for the added cost of health benefits is to offer perks and some form of credit allowance that can be exchanged for health visits. Employer-sponsored, out-of-pocket payment platform Paytient, for example, lets employers offer deductible credits to pay for healthcare costs without adding interest and while sparing their HSA.
The office’s perks can include onsite child care, yoga, meditation or gym classes, health food coupons, some eldercare benefits, psyche profile options, and even laundry care options.
But the above options are for startups that have stabilized a little and can afford to give these additional benefits to the basic plan.
One thing is clear the new norm is an expectation of good health coverage and a responsible employer behavior towards health concerns and benefits.
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