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Small Business Employee Benefits and HR Blog

At a Loss with a Health Benefits Plan? Here’s What Your Small Business Needs

Health benefits are a big part of your small business. Whether you offer them or not will have a lasting effect on your company’s future. Knowing this, if you’re feeling defeated by health benefits plan options, we’re here to help you make a smart, quick decision. We’ll help you understand why individual health insurance reimbursement is the best option for your small business, and explain the many advantages of this type of health benefits plan.

Why Do You Need a Health Benefits Plan?At a Loss with a Health Benefits Plan? Here’s What Your Small Business Needs

Did you know that an eHealth study revealed 44 percent of small business owners offer health insurance because of a moral obligation, and 33 percent offer it for recruiting and retaining purposes?

But what about those who do not offer health insurance to their employees? What’s their reason? Cost.

Your small business relies on its employees to sustain and grow the business. Competitive health benefits help retain valued staff, and it shows employees you care. But if you’re like most small businesses, you need a more affordable health benefits solution to recruit and retain key employees. What’s the solution? Individual health insurance reimbursement.

What is Individual Health Insurance Reimbursement?

Individual health insurance reimbursement (“premium reimbursement”) is an alternative to group health insurance, and it is emerging as a better way to offer health benefits. It is a health benefits plan where the employer reimburses employees for their individual health insurance premium expenses.

The concept is simple. With individual health insurance reimbursement, the business offers employees a monthly healthcare allowance to use on individual health insurance – instead of contributing to a group health insurance plan.

Major Advantages of Individual Health Insurance Reimbursement

There are many advantages to individual health insurance reimbursement for your small business, here are six of them.

Advantage #1 - Individual Health Insurance is Portable

You and your employees can keep your individual health insurance policy no matter where you are or who you work for.

Advantage #2 - Individual Health Insurance is Affordable

Individual health insurance plans are 20 to 60 percent less expensive than a group health insurance policy. Additionally, you and your employees can qualify for $2,000 to $12,000 per year in premium tax credits to use towards individual health insurance.

Advantage #3 - Individual Health Insurance is Customizable

You and your employees can customize your individual health insurance plan exactly how you need it. From doctors and hospitals, to deductibles and copays, individual health insurance is fully customizable.

Advantage #4 - Cost Control

As a small business owner, you like to know where your money is being spent, and how much. Offering individual health insurance reimbursement to your employees means you get to choose a set monthly amount to reimburse your employees for their individual health insurance.

By determining employee classes, you can vary allowances by job role. And, if your employees choose not to utilize your monthly reimbursement, it stays with your business.  

Advantage #5 - Tax Free

Individual health insurance reimbursement plans are tax-free for your employees and tax-deductible to your business.

Advantage #6 - Recruiting and Retaining

As previously mentioned, a health benefits plan is important to your small business’s success. Part of your success is the employees you hire and keep on board. In order to do this, you need good health benefits. An individual health insurance reimbursement plan is the perfect health benefit to recruit top talent in your industry and keep your employees around.

Conclusion

Finding a health benefits plan that fits your budget and your HR goals is tough. Many small businesses feel at a loss. What your small business needs is to adopt a new approach to health benefits - individual health insurance reimbursement. In fact, because of the advantages discussed above, it's estimated that 60 percent of small businesses will transition to individual health insurance reimbursement by 2017.

What questions do you have about an individual health insurance reimbursement plan? Comment below, we’d love to help you out.