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Small Business Employee Benefits and HR Blog

Is Group Health Insurance Destroying Your Small Business?

You’ve put a lot of hard work into your small business, and it’s paid off. But then again, you knew going into it that hard work was part of opening a business. One thing you probably weren’t expecting was that group health insurance could destroy your business, were you? But you’ve worked too hard to let that happen. Fortunately, there is a new solution to keep your small business alive and well. The answer? Individual health insurance and premium reimbursement.Is Group Health Insurance Destroying Your Small Biz?

We’ve put together a quick overview of how group health insurance is destroying your small business and how offering premium reimbursement to your employees will allow you to come out on top and succeed.  

A Brief History of Group Health Insurance

You know, group health insurance wasn’t always the way it is today - unaffordable and restricting. In the 1930’s and 1940’s, group health insurance companies began to offer discounted contracts that were negotiated with doctors and hospitals. In the 1950’s, employer sponsored group health insurance began to emerge. Employers were contributing a good deal towards their employees’ healthcare. However, in the 1980’s and 1990’s, group health insurance began to rise rapidly and became unsustainable.

How Group Health Insurance is Destroying Your Small Business

You might be thinking, “okay, how much did group health insurance really increase by?” You may be surprised to know that the average cost to cover an employee with group health insurance has increased from $2,196 per year in 1999 to $6,025 per year in 2014. And for family coverage, the cost has increased from $5,791 per year in 1999 to $16,834 per year in 2014. An increase of this size is, to say the least, unsustainable for larger corporations - and nearly impossible for small businesses.

That’s not the only part that is destroying your small business, either. High costs for group health insurance have forced many small businesses to stop offering health insurance altogether. This has resulted in difficulty in retaining current employees and recruiting new ones.  But, isn’t there a solution? Yes, offer premium reimbursement to your employees!

The Solution - Premium Reimbursement

So, what is premium reimbursement? It is as simple as it sounds - reimburse a portion of your employees’ health insurance premiums. Your employees purchase their own individual health insurance plan and then you offer a set dollar amount for your employees to use every month towards their health insurance premiums. Sounds easy, right? That’s because it is.

Additionally, you’ll save time and money. Individual health insurance is 20 to 60 percent less expensive than group health insurance, is portable, and you and your employees can choose the plan that fits your situation best. As an employer, offering premium reimbursement to your employees takes only minutes a month and frees up time to focus on your business.  

Lastly, offering premium reimbursement is a great way to retain and attract new employees for your small business - it gives you a competitive edge.  

Can Premium Reimbursement Save My Business?

Alright, now you know why group health insurance is destroying your small business. You also know what you can do if you are currently offering, or not offering, group health insurance. But, can premium reimbursement really save your small business? Yes.

The time and money you are putting into offering group health insurance is slowly destroying your business. Furthermore, if you didn’t offer any type of health benefits, that too was destroying your business. But now, you have a solution. You can offer premium reimbursement for your employees’ individual health insurance. It’s the way to offer affordable, portable, health benefits for your small business and keep you and your employees focused on your company’s values, success, and vision.

If you’re not sure how to start offering premium reimbursement, click here for a free step-by-step eBook on premium reimbursement.

Do you think group health insurance is destroying your business? Let us know your thoughts and comment below.