Small businesses are starting to look at alternative options to supply benefits for their employees. Some employers are afraid they will burden the cost themselves. However, persistent employers can find solutions and keep it affordable.
Employees take a major role in keeping the revenue engine humming along. This is important to a thriving business, such as yours. Making that investment in employee benefits is crucial. But how can you afford it?
Big things are always accomplished in steps. You did not get to your current level of success overnight. Everything starts out in projects and a low budget. Eventually it grows into something really big.
Kind of like your garden in the backyard. When you are new to it, you start off small. There is no need to go big and cause stress and possible failure.
This is where the new healthcare law changed how small businesses can offer health insurance.
Prior to January 1, 2014, small employers could reimburse for health insurance for almost any amount the employer wanted. Today, the new law says you cannot do it that way, or have a fine of $100 per day, per employee. Pretty harsh!
If you cannot reimburse, what do you do?
Here are some ideas:
- Bring in an insurance advisor that is a good subject matter expert on healthcare reform. An employer can let the advisor sit with each employee individually and customize his or her own plan. The employee will be responsible for 100% of the premium on an after-tax basis. This can be done through the public exchange and receive a tax credit (if they qualify), or a private exchange. An employer does not have to contribute a dime. Just by bringing in this resource provides value to your employees.
- If you do want contribute to the premiums, here is an option. Once the advisor helps pick a plan, the employer can increase the employee’s wages to offset the cost of premiums. This goes down on the books as an income increase, not a reimbursement. Taxes will be paid on the extra portion as any other income received by the employee. More or less, this is a pay raise to all the employees.
- Provide a traditional employer sponsored group health plan. Employers do have a minimum they must contribute to the employee’s portion of the premium only. Some insurance companies require the employer to pay 25% of the employee premium. Other insurance companies could be 50% or higher. Spouses and child(ren) coverage is optional to offer and no minimum contributions are set for the employer.
Note: By doing an employer sponsored group health insurance and not offer coverage for the spouses and family could allow the spouse and children to qualify for a health insurance tax credit. This could reduce their premiums to keep it affordable. If they do not qualify for the credit, they can choose any plan they want with the insurance advisor.
There are several ways to provide value to employees using employee benefits and keeping it affordable to the employer. Your employees will thank you for doing it and may be a little more productive in the workplace.