If you’re running a small business, you know how important it is to save money. You can conserve funds on office supplies by getting them for free from major retailers by way of rewards programs. Social media marketing is also a great, low-cost way to save on advertising. In addition, there are plenty of free software options that perform just as well as the big brand names, but at a fraction of the cost. One area that’s not so easy to conserve money in, however, is health insurance. There’s a lot of uncertainty surrounding the Affordable Care Act for small businesses, and even though the employer mandate has been delayed for a year, it’s a reality you’re eventually going to have to deal with. Here are five ways to cut healthcare costs at your business.
1. Take Advantage of Affordable Care Act Discounts
Although criticisms of the Affordable Care Act have gotten a lot of press recently from individuals and business owners alike, there are a few nuggets that small business owners can certainly enjoy. For one, you get a health insurance credit of as much as 50% of the cost for your employees in 2014 as long as you pay at least 50% of the employee premium. This is good for all businesses with fewer than 25 employees whose average wages are under $50,000.
2. Offer Fewer Benefits
Instead of eliminating healthcare entirely, which may make you less able to attract qualified candidates, consider offering fewer benefits. You could eliminate or reduce vision or dental coverage, both of which are appealing to employees, but by no means considered standard. According to a survey conducted by Savitz, an employee benefits group, it costs a business $646 on average annually to offer family dental coverage in 2012, but only $249 to offer individual coverage. With small tweaking to your benefits arrangement, you can still be appealing to employees, while significantly cutting costs.
3. Raise Premiums
Raise the employee contribution for your health insurance plan by asking your staff to pay, for instance, 50% of coverage costs instead of 35%. Just be sure to inform your staff well before you plan to implement the change and keep the increase minimal. Partner this change with other changes that add value for staff, but won’t significantly affect your bottom line. For example, you could offer telecommuting or flexible work hours. Announce both changes simultaneously so as to minimize push-back and complaints.
4. Encourage Your Employees to Get Healthy
Encourage employees to get healthy with an employee wellness program, which can reduce costs by decreasing the number of times your staff visit the doctor. A wellness program may focus on dietary and nutrition advice or include a free or discounted fitness center membership. You can even start off simply by providing a healthy choice of snacks in the break room. Organizing a group exercise or jogging program is another effective and low-cost idea as well. The website Wellsource reports that the average cost for a wellness program per employee is $160. However, according to research conducted by Harvard University, businesses saw medical expenses go down $3.27 for each dollar spent on a wellness program and the cost of absenteeism fell by $2.73 for each dollar spent.
5. Participate in a Purchasing Cooperative
You can also cut health insurance costs by participating in an existing health insurance purchasing cooperative run by your state; 22 currently have them. This is a better alternative than setting one up on your own, which can be time and cost-prohibitive. Participating in a cooperative allows you to pool your purchasing power with other small business owners in your state in order to procure health insurance for your staff at lower rates. The cost to provide plans to employees through a cooperative will depend on how many employees you have, the type of coverage you want to provide, and the state you live in. You might find yourself with more plan options as well.
Final Remarks
By choosing not to offer any health insurance to your staff members, you face several risks. If you employ more than 50 people, a health insurance penalty of $2,000 per employee (after the first 30) is imposed in 2015. Not to mention the fact that qualified candidates may choose to work where benefits are available, instead of at your business. Since the road ahead is still a bit unclear, your best bet is to provide insurance for your staff, but cut its costs wherever you can.
Do you know of any other ways small business owners can save on health insurance?
More Questions? Ask your business health insurance questions or find a cpa online.
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