Many small business owners understand the need to offer health insurance. Offering it can be a great way to attract new employees and keep existing ones happy.
However, health insurance is a complicated topic with many aspects to consider. That’s why it’s important to work with a trusted advisor who can help you navigate all the options and make informed decisions.
Cost
Providing employees with a health insurance plan is an attractive benefit that can be a big draw to potential workers. However, small business owners must take cost into account when making this decision.
Premiums vary greatly between insurance companies and plans. They may be based on your business location, the age of your employees and whether or not you offer family coverage (when available).
Employees can make pre-tax contributions to their premiums that reduce their taxable income. This helps them maintain good financial standing and is an excellent incentive to remain with your company.
Choosing the right health insurance is a critical step in helping you stay competitive and help your company’s bottom line. It’s also important to know the medical needs, budget and coverage preferences of your employees.
Coverage
Small business owners often don’t realize that health insurance is a legal requirement under the Affordable Care Act (ACA).
If you employ 50 or more full-time employees, you must offer affordable health insurance to your workforce or face a shared responsibility payment to the IRS.
Providing group health insurance is also a great way to attract and retain talent. But the problem is that many small businesses cannot afford to pay the premiums for traditional group plans.
For this reason, some states have implemented a community rating system that assigns premiums to businesses based on their age and location. This type of underwriting can reduce the cost of insurance and help to guard against radical increases in premiums from year to year.
Taxes
When you’re running your small business, you need to be aware of the various taxes you might owe. Depending on where you live, you might need to pay sales, property or excise taxes.
There are also taxes that apply only to certain types of businesses. For example, if your company sells cigarettes or alcohol, you might have to pay an excise tax.
Many small businesses also pay dividend taxes if they receive distributions from their companies. These are similar to federal income tax but are calculated according to the corporation’s structure and shareholder’s individual tax bracket.
Having a good understanding of the taxes your business will need to pay can help you prepare for them in advance and avoid surprises when they come time for filing.
It can also be a good idea to consult with a tax professional, such as one of our Endorsed Local Providers (ELPs), for a more in-depth look at your tax situation.
Options
There are several options available to small businesses when it comes to health insurance. Whether you’re looking for a basic plan or a more comprehensive one, it’s important to find the right plan for your business and your employees.
Choosing the best health insurance for your small business is an important decision that should be made only after you’ve had a consultation with an experienced agent who knows your needs.
During this initial meeting, you should have an idea of what kind of policy would work best for your business and your employees.
There are several types of plans to choose from, including high-deductible plans and fully-funded options. The latter is the most popular choice for small businesses and is generally the least expensive option because it eliminates many administrative costs. It also keeps costs predictable by paying a premium based on the risk of high claims.