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Small Business Employee Benefits and HR Blog

Your Small Tech Company Can Still Offer Healthcare

IMG_0811Finding affordable healthcare benefits may not be a top priority for small technology companies, SaaS companies, and tech startups. Since many tech companies have limited capital, the cost of traditional group health insurance creates a major barrier in obtaining healthcare for their employees. In addition, small tech companies and startups may not have enough employees to meet the minimum participation requirements.

Nonetheless, healthcare benefits are an important part of recruiting and retaining the best developers, programmers, and IT staff. While many small tech companies are tempted to forgo health insurance, this leaves the employees at risk of incurring large medical bills in the case of an accident or expensive medical procedure.

A more ideal solution is for small tech companies, SaaS companies, and tech startups to send their employees to the individual health insurance market. The company can still help their employees with their individual health insurance costs while remaining within the confines of their budget. Here’s why employer-funded individual health insurance is an ideal solution for small tech companies, SaaS companies, and tech startups.

Why Individual Health Insurance is Ideal for Small Tech Companies

Employer-funded individual health insurance is ideal for small tech companies because the solution allows them to offer healthcare benefits for employee recruiting and retention, while still controlling their benefits costs. The solution is affordable, 100 percent paperless, and flexible enough to fit the needs of a busy tech company. In addition, by utilizing employee classes, the company can set up different healthcare allowances for the different employee roles. This is attractive to small tech companies who are often in a competitive hiring market for software developers, programmers, and IT staff. Here are the benefits of individual health insurance and why they fit well with small tech companies:

1. Controllable Costs: Being able to set, control, and predict all health benefits costs is revolutionary for many small tech companies. Reimbursing employees’ individual health insurance gives the tech companies controllable costs by:

  • Defining their budget by setting any contribution amount to employees’ healthcare

  • Giving employees access to monthly healthcare allowances

  • Allocating different allowances to developers, programmers, and IT staff

  • Allowing employees to select their own individual health insurance policies

  • Reimbursing employees only for eligible health insurance premiums up to the amount in their healthcare allowance

2. Technology-Based Solution: Small technology companies have been early adopters of employer-funded individual health insurance because most companies use reimbursement software to administer the benefits.

3. More Time Growing the Company: Many small tech companies are operationally lean, focused on optimizing business results with limited resources. Employer-funded individual health insurance aligns with these lean goals. With a credible reimbursement software provider, the reimbursements take less than 5 minutes per month to administer online. Some small tech companies consider grossing up salaries for their employees’ health insurance without a formal plan or compliant software. However, remaining in compliance with federal regulations and health reform can be costly, time-consuming, and an administrative hassle.

A credible reimbursement software provider eliminates the time, costs, and administrative hassle of offering health benefits. Offices that select a reimbursement software provider can expect to:

  • Spend less than five minutes per month administering their reimbursement plan

  • Have access to their reimbursement plan online 24/7

  • Incorporate reimbursements with their existing payroll system and HR process

Why Individual Health Insurance Works Well for Employees of Small Tech Companies

1. Familiarity with Software: Employees are comfortable logging in to an online portal to submit their requests for reimbursement, and appreciate the paperless nature of reimbursement software.

2. Employee Choice: Individual health insurance offers more choice and control to employees by allowing them to choose a plan that fits their own needs, including coverage level and network. Employees can choose their own plans to work with their budget. These plans can be customized to individual circumstances and age.

For example, if a young employee is relatively healthy and on a tight budget, a plan with a lower premium and higher deductible may be the right choice. On the other hand, for employees with more healthcare needs, a plan with a higher premium and lower deductible may be the better plan.

3. Lower Costs: Individual health insurance costs up to 60% less than group health insurance coverage. Additionally, employees may qualify for premium tax credits, depending upon their income level, household size, and eligibility for other government subsidized programs.

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