We all have heard the old saying An apple a day keeps the doctor away but unfortunately, it isn’t the case. And with medical costs going through the roof small businesses are feeling the pinch. Regardless of the entity’s size, many businesses want and have to offer healthcare benefits for their employees. The Affordable Care Act (ACA) strongly encourages employers to at least inform their workers on available options even if they personally don’t offer them. For companies that do offer health insurance, it’s difficult for them to keep costs affordable while still providing adequate coverage. In fact, each year this task becomes more challenging but employers are strategizing and implementing effective ways to accomplish this.
Truth be told, healthcare expenditures are one of the most saturated areas in America’s marketplace which trickles down into the costs of standard health coverage. Trillions of dollars are spent each year and total spending increased by over 5% in 2014. In addition, the U.S. spends nearly 50% more than other countries with nearly equivalent development and income. Some of the reasons for this are simple while others are not. For one, healthcare expenses are high because the average American’s health is extremely poor. Food, alcohol and tobacco consumption is done in excess. These factors alone cost trillions of dollars to manage. Hospital care, pharmaceuticals, medical operations, and other administrative expenses accelerate costs even further.
On average, small businesses are charged $500 to $15,000 for standard health insurance. What are some options that employers consider as the best course of action for cost-reduction? Firstly, they are evaluating their deductible and pinpointing whether or not they could raise it. By doing so, insurance premiums will decrease by default. Secondly, many employers only provide what is needed or preferred for their work environment. They may decide to discontinue additional features like product liability and property insurance. Moreover, small businesses are discovering the power of Business Owner Policies (BOP) rather than individual policies. Its bundled nature is generally less expensive than stand-alone coverage. Next, smart employers take their time to shop around and find a few options from more than 1 broker. Also, by securing their businesses through measures like theft-prevention programs, disaster preparation etc., they greatly reduce risks which in turn may keep costs down. These last 2 suggestions may seem obvious for some but you’d be surprised how the truth is often hidden in plain sight.
Other elements to consider is that since 2014, federal tax credits have been available to reduce employer costs by 50% and 35% for non-profits. The Small Business Health Options Program (SHOP) is the only channel to go through for these tax credits and provides additional features that small businesses may find appealing. Flexible Spending Accounts (FSA) can also receive infinite contributions from employers in which they could file as a tax write-off. Finally, the Workplace Wellness Program gives businesses with less than 100 employees eligibility to receive grants for health-related purposes.
As the workplace becomes more conscious of health coverage and the importance of offering sufficient coverage, small businesses continue to find ways to keep costs low. Fortunately, there are many programs and policies already in place to achieve this while the rest is up to employer’s own creativity and innovation.
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