Small business owners with 50 or less employees are not required to offer health insurance to their employees under the Affordable Care Act. However, if you fall into this 50 or less category, that doesn’t mean you shouldn’t offer health insurance benefits. There are just a few questions you should ask first:
- How much can you afford to spend on health insurance for your employees? Keep in mind that if you offer health insurance to your employees, you don’t have to carry the cost alone. Typically health insurance premiums are split between the employer and the employee and you can be responsible for anywhere between 0 and 100% of those costs. As a general rule, though, most employers pay around 50% of the premiums for their employees. According to a Kaiser Family Foundation study, the average cost of a group health plan was about $6,000 in 2014. This would come out to be around $3,000 minimum per employee. This price fluctuates greatly between the different types of plans, so it’s best to do some research of your own before deciding whether it’s in your budget.
- Do your employees need health coverage? Rather than just assuming your employees want health insurance benefits, you might be better off to simply come out and ask them if they’re interested in employer-provided coverage. If you only have a few employees on your team, there’s a good chance they have health insurance through their spouse or a private plan that they’re happy with. It’s best to have an open and honest conversation with your employees about their current coverage and find a situation that suits you both.
- Will you need to offer multiple types of plans for your employees? If a one-size-fits-all plan will work for your employees, that keeps things simple. However, if your employees are diverse in age, expecting to have children in the near future, or deal with a chronic condition, they may require more individualized plans. Some employees may be happy with paying higher premiums each month, especially if they require frequent care, while others rarely visit a doctor and want to pay the lowest premium possible. These are just a few things to take into consideration before deciding on which health insurance plan to offer your employees.
- Can your employees handle purchasing health insurance on their own? There are a number of advantages and disadvantages to employer-provided health insurance for employees. If your employees seem happy with purchasing their own or using their spouse’s insurance, that might be the best and most cost-effective situation for your company. You might even prefer to give your employees a stipend, rather than offer a group plan, so they can buy insurance on their own but still feel valued by their employer.
As your company grows and changes with time, you may decide you need to offer health insurance to your employees. It’s best to reevaluate your benefits on a yearly basis and update them as needed.