If your small business is covered under the Affordable Care Act, then saddle up as you will need to prepare for an increase in health care costs. Small businesses with fifty or fewer employees and are part of the Small Business Health Options Program may be disadvantaged by the increased prices as they do not have the resources to negotiate with health insurers. Health insurers are advocating for a 10% increase in median monthly premiums, alluding to increased supplies and labor cost (following a recent study from the Kaiser Family Foundation).
Following the 2022 filings, it will cost small businesses an average of $517.37 per person (monthly) for health insurance in Washington state. Depending on the health plan selected, costs may range between $400 to over $600 monthly per person. Using average costs, a business with five workers could be expected to pay approximately $2,586 monthly or $31,042 annually to cover the healthcare of its employees.
When it comes to operating a small business, managing costs is key. Small businesses often have less room for error and must be especially conscious of how much money they spend in any area. With this in mind, you probably already know you can’t skimp on health insurance coverage for your employees. But what are some strategies for keeping those costs low?
Check your employee eligibility and benefits package
Before you get too far into your plan design, you must ensure each employee is eligible for coverage. Each state has its requirements for health plan eligibility, and some include factors such as the employee’s age, whether they have dependents, or if they have other coverage options.
If you’re unsure if all your employees are eligible for your health plan, talk to your benefits administrator about getting an employee eligibility report. This report will walk you through each employee’s eligibility and help you avoid taking on employees who don’t qualify for coverage.
Set a payroll deduction limit for health care
The amount your employees contribute to their health plans is one of the most critical factors in determining how much your company’s health plan will cost you. The standard amount is about 15%, but some companies choose to make their employees contribute more.
It’s important to note that any payroll deduction towards employee health coverage is taxable income. So the amount your employees put into their health insurance plans will be reflected in their W-2 forms. If you’ve decided to make, your employees pay more for their health benefits, set a maximum amount deducted from each paycheck. This way, you can ensure that your employees don’t pay too much for health coverage and will still have enough money to live off each month.
You are responsible for ensuring that your employees access affordable health coverage. That said, it’s important to remember that there isn’t just one way to do this. It’s essential to consider your employees’ needs and ensure you’re getting the best possible deal on health coverage for your company.