That’s why we’ve put together this list for employers, meant to serve as a quick guide to small business health insurance. (For a more in-depth guide, download this free ebook.) 

Below, you’ll find facts, figures, and guidance on the following:

• When you should begin offering small business group health insurance 
• How to budget for small business health insurance costs
• How to get health insurance for small business
• What to look for in small business health insurance plans
• How to offer health benefits employees actually care about

1. If your business has 50+ full-time equivalent employees, you are legally required by the Affordable Care Act to provide health insurance to employees. If you have 1 to 49 employees, it is not legally required — though it is strongly suggested — to offer group health insurance.

2. Most businesses in the U.S. are small. Yet the smallest businesses are the least likely to provide employee health insurance, with its rising cost being the greatest deterrent for small business owners. In 2021, only 49% of businesses with 3 to 9 employees offered health coverage, compared to 65% of those with 10 to 24 employees, and 74% of those with 25 to 49 employees. 

3. The best time to start offering small business employee health insurance? ASAP. It’s critical if small businesses want to compete with larger ones for top talent. Some studies show that health benefits are even more important to workers than salary — 88% of job seekers give “some” or “heavy” consideration to better health, dental, and vision coverage when choosing between a high-paying job and a lower-paying job with better benefits.

4. While it is costly to offer small business health insurance, it is also costly to lose employees to jobs with better benefits. Replacing an employee in a technical role costs 100% to 150% of their salary — not to mention the negative effects losing a coworker can have on workplace morale and productivity.

5. Understanding the average cost of health insurance for small business will help you determine whether your budget is ready to accommodate the investment. On average, small businesses pay $6,485 for each covered individual and $13,737 for each covered family annually. Learn more about small business insurance costs. 

6. Before shopping for health insurance plans for small business, it’s wise to learn the differences between the most common plan types. That way, when you encounter the acronyms HMO, PPO, and EPO, you’ll already be familiar with their basic parameters. 

7. There are lots of places you can go to shop for health insurance for a small business — legacy carriers like Blue Cross Blue Shield, modern insurance companies like Sana, professional employer organizations (PEOs), and the online health insurance marketplace. Read more about where to shop for plans. 

8. A small business health insurance broker can help you find, quote, and secure employee
 benefits if you’d like professional guidance during your search — but keep in mind that using a broker is not required. You can go directly to the websites of most insurance companies to request a quote for your small business.

9. The plan you should choose is the one your employees will actually use. After all, the reason you’re investing in health insurance in the first place is to make your employees feel valued. Ask your employees about their preferences when weighing your small business health insurance options — for instance, do they value flexibility or affordability more highly when it comes to their healthcare?

10. Health insurance for small businesses should not be treated the same as health insurance for large corporations. Traditional health plans offered by legacy carriers tend to be more favorable for larger companies, while modern insurtech companies are leading the way in health plans built specifically with small businesses in mind.  

11. One of the reasons health plans from legacy carriers tend to be more expensive is because their pricing model involves negotiating “discounted rates” with providers and hospitals. But there is nothing stopping providers and hospitals from ignoring the actual cost of treatment when calculating rates — for instance, about 1 in 5 hospitals marks up drug prices at least 700%. That’s why it’s best to choose insurance companies with non-arbitrary, value-based pricing models.

12. A great way to offer affordable employee health coverage is to self-fund your employees’ healthcare — as opposed to paying a high monthly premium to an insurance carrier to fund it for you. Self-funding means you only owe money when your employees seek care. Learn more about self-funding and how to manage it.

13. Self-funded health plans are cost-effective and risk-free for small businesses when they are level-funded. Level-funding places an upper limit on healthcare costs so that unexpectedly high claims costs cannot wipe out your monthly budget — which is why level-funded self-insurance tends to be the best health insurance for small business. 

14. Giving employees access to wellness resources is an effective way for self-funded employers to keep small business health insurance costs low. The more opportunities employees have to take care of their own health, the lower their healthcare claims costs will be over time. Some health plans have built-in wellness resources, such as virtual health coaching and chronic condition management.

15. Mental health coverage is non-negotiable in 2022. According to a survey conducted for Fortune, the top three benefits employees want most in addition to medical coverage are: a flexible schedule, employer retirement contributions, and mental health coverage. Choose a health plan with low out-of-pocket costs for mental health services and common mental health medications.

16. 45% of small business owners spend one day or more each week on administrative human resources (HR) tasks. If your business has a lean or nonexistent HR department, be sure to choose a health insurance company that will help alleviate your HR burden. Modern insurance companies are more likely than legacy carriers to design health insurance for small business owners, offering intuitive technology that simplifies onboarding and benefits management.

The post Top 16 things to consider when offering small business health insurance appeared first on Sana Benefits.

Costs are always a major concern, with health insurance likely being your business’s second-largest expense. But that expense could prove to be one of your best investments, as it’s likely to bring in the employees you need to execute on your goals. 

The question is: when should your startup begin offering health insurance? For many that have the funding to do so, the answer is right away. Other businesses may need to wait for a certain level of growth. There’s no right or wrong answer, but consider the following when making your decision.

What size businesses are offering health insurance?

According to Forbes, 35% of businesses with 2-15 employees offer health benefits. That may seem like a low number, but budgets are usually pretty tight as businesses look to see how viable they are in the marketplace before incurring additional expenses. Some of the more well-funded startups will be able to offer benefits at this stage as they have a longer roadmap that investors are willing to bet behind.

When the headcount is brought up to 16-50, the share of businesses offering health benefits almost doubles. At that point, 65% of businesses are at the point where they’ve decided they need to give their employees access to health insurance. While budgets may still be very tight, health benefits have become such a big part of expected compensation that startups and small businesses are finding ways to make it happen for their employees. 

Once businesses go above 50 full-time employees they are required by law (Affordable Care Act) to offer health benefits or pay a steep penalty. However, regardless of size there are different levels of benefits a startup can offer and they have to decide how much they will pay for before passing on any costs to employees. 

There are other ways startups are compensating employees, ranging from stock options to free gym memberships, but health benefits have become an expected part of the compensation package for job seekers. Your current employees are also likely looking around at their options if other businesses can offer valuable health benefits that you haven’t been able to yet. Employees may even consider lower pay elsewhere if better benefits are part of the equation. Considering benefits’ effect on retention and that it’s more costly to hire new employees  compared to retaining the ones you already have, it may be more economical than you think to offer health benefits.

What benefits matter to your employees?

You don’t have to take a guess at this, just ask them! Whether it’s before you shop around to get a good idea of what they value in a plan or to select from several options while making a final decision, you can easily send a short survey to your employees to make sure their input is considered. 

Startups offering health insurance really doesn’t need to be as complicated as it seems. You don’t even need a broker these days if you don’t want to use one. If you have a young workforce or just one that hasn’t had a lot of experience in choosing their benefits, send them our post on how to pick from your employer’s plans as they enter open enrollment.

At Sana, we can work with you to change the way you do benefits. We work exclusively with small businesses to provide amazing plans at lower costs than legacy carriers. We have simplified the process to make it easier for admins and employees alike, and our members consistently rate their experience with us higher than any other health insurer in the industry.

The post When should my startup begin offering health insurance? appeared first on Sana Benefits.