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    What Health Insurance Should You Offer at Every Stage of Growth?

    7 mins

    As an employer, should you be offering group health benefits to your employees? Do you legally need to offer health benefits? If so, when do you start? How do you start? How do you determine what health insurance to offer?

    The U.S. Healthcare system is a unique beast, and insurance is no walk in the park either, especially when you have to consider factors such as network availability, plan design, and plan participation requirements, all on top of what is typically the biggest consideration: cost

    Advantages of Offering Employee Healthcare Benefits

    Providing health insurance to employees is a great way to show your employees you care about their well-being. There’s no surprise employees regularly rate health insurance as the most important benefit they receive.

    The following are just a few advantages that come with offering health insurance to your employees:

    • The company can stay competitive when it comes to acquiring and retaining talent

    • Possible tax advantages for employer contributions to employee health insurance premiums

    • Employees being able to improve their wellbeing and access the care they need to live a good quality of life

    Whether you are a fast-growing team of ten, a successful mid-sized company, or a large-scale enterprise, health care benefits should not be taken lightly. Here are some ways you can think about your health insurance offering at various stages of your company’s growth.

    For Small Employers

    For the purposes of this article, we’ll define “small” as less than 50 FTEs or Full-Time equivalents, which aligns with the federal threshold that separates “small” from “large” employers. 

    NOTE: There are several states - CA, NY, CO, and VT - who have set their fully-insured threshold at 100 employees, but the vast majority of states nationally use 50 employees as their small-group vs. large-group cutoff.

    Simply put, small employers have it the hardest. Over the last decade, health insurance costs have risen by 43 percent for small firms. This, combined with the federal exemption (small businesses don’t have to offer health plans, according to the Affordable Care Act, or ACA), has resulted in only 30% of U.S. small businesses offering healthcare plans to their employees in 2020.

    A health plan is also often one of the first things a quality candidate asks for when making the decision to join your company, so there’s only so long a growing company can go without offering a health plan.

    Despite the difficulties, there are several options available to small companies:

    1. Traditional health plans: Many carriers offer a menu of plan choices (PPO, HMO, EPO, or HDHP), despite limited flexibility in negotiating rates or plan design. If one of these plans meets your budget and needs, it may make sense to offer a traditional health plan.

    2. Alternate solutions - QSEHRA, ICHRA, EBHRA: These reimbursement accounts make it possible for a small employer to allocate pre-tax money to employees to use in a variety of ways to fund their healthcare needs.

    3. Professional Employer Organization (PEO): A PEO can help you consolidate your HR, payroll, and benefits needs under one roof, and in the process provide a bit of a price break on your health plan as well.

    For Mid-Sized Employers (50-500 Employees)

    At this size, the ACA requires your company to offer a health plan that meets minimum guidelines for both plan design and affordability to your employees, so it’s less a question of whether to offer a health plan and more a question of how to offer a health plan. 

    It also becomes necessary at this stage to begin working with a benefits consultant/broker, if you haven’t already done so. A good consultant/broker will help you evaluate all of the options below and help you build the right plan for your company.

    Depending on your population’s geographic distribution, you’ll first have to decide between working with a regional carrier vs. a national carrier. For example, if your employees are geographically dispersed, it wouldn’t make sense to choose a carrier with a strong network only in one part of the country. Once you have chosen your carrier, you can begin refining the actual plan design and its specific features.

    At this size, your mid-size business healthcare plan budget really starts to grow, so cost control becomes a priority. You can begin exploring alternate ways of funding the plan, like level-funding or self-funding, which can provide you with cost savings and plan design flexibility that isn’t generally available in a fully insured plan. 

    Here, you also generally have your first glimpse at claims data and can use that information to make more informed decisions about health benefits for your midsize company.

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    For Large Employers (500+ Employees)

    At this stage, you have likely already gone through the exercise to explore alternate means of funding the plan, and have established a program that meets the majority of your population’s basic needs. 

    You may be offering a health plan through multiple carriers, with certain plan features available to different subsets of employees, depending on how your company is structured.

    Data is king at this stage. Your population is large enough that you’re able to get detailed claims data and plan utilization data that can show in granular detail how much has been spent, how employees and their families are spending it, and where certain levers can be pulled to adjust cost, employee behavior, or both. Analysis of this data often uncovers previously unseen patterns that can be addressed in a variety of ways.

    Your budgeting and planning cycle also occurs earlier in the year, so there is typically more time to evaluate alternative solutions that can supplement the health plan and target specific pockets of your population who have specific needs, based on the data analysis described above. 

    You can explore a wide variety of customized solutions both through the carrier - plan designs, networks, utilization management, and additional resources - and also through external vendors who can focus on conditions like mental health management, musculoskeletal condition management, and other types of chronic condition management that impact the population (just to name a few).

    While there are many reasons organizations provide health insurance, the two reasons most commonly cited by companies of all sizes are:

    1. To preserve the health and wellness of their employees

    2. To recruit and retain the right employees  

    A company is generally only as good as its employees, and it needs those employees to concentrate on being their best productive selves at work.

    With that said, it is important to be honest about your organization’s needs to determine the right type of health plan to offer. Ask these five questions to get the gears turning:

    1. Are health benefits critical to your organization’s growth or future?

    2. Is your organization legally required to offer health benefits?

    3. Do you need to allocate your capital to health benefits or do you need to allocate it elsewhere?

    4. Do health benefits impact your ability to attract & retain the employees you need, and is your benefit package comparable to your peers and competitors?

    5. Would your employees leave the organization if you didn’t offer health benefits?

    How to Get Started

    Navigating the benefits space and selecting the right options, whether mid-size business healthcare plans or smaller group plans, can be a time-consuming and challenging process. 

    With so many different choices, it can be daunting, especially considering you have to factor in things like the risks, costs, regulation, and the bandwidth you or your HR team has to manage all of these details.

    At Bennie, our benefits and technology consulting services will help you find the right plans and solutions for your business’s specific needs. We take everything into account and develop a plan of action, keeping your organization’s goals in mind. Schedule a demo with us today to learn about how Bennie can help you choose data and tools you need to understand and use employee benefits effectively.

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    Greg Autuori
    Vice President, Strategy & Benefit Operations at Bennie

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