Providing Health Care Coverage— Top Three Small Business Myths

Small business owners make big decisions daily, and ranking high on that list is the issue of providing employees with health care coverage. Given the importance of this decision, step one should be separating fact from fiction. While there’s no shortage of misconceptions on this subject, let’s navigate our way through the top three myths that tend to bubble up when discussion turns to small business owners offering health insurance.


Myth No. 1—Health Insurance is too Expensive

While small business owners are wise to keep an eagle eye on expenses, it’s equally unwise to assume that insurance is prohibitively costly.


Many health insurers are acutely aware of the unique needs of small business owners. As a result, there are now numerous options for affordable group insurance plans. For example,

small business owners can consider offering multiple plans, including one with a high deductible that will work to curb the owner’s costs. Savings also can be accrued by bundling medical, dental, and vision coverage with one carrier.


And it’s worth noting that—as a result of Health Care Reform—small businesses are eligible for health care tax credits. In fact, these tax credits have been available since the 2010 tax year. To qualify for a tax credit of up to 35% now—and 50% in 2014—small business owners must pay at least half of employees’ health care premiums and have 25 or fewer full-time-equivalent (FTE) employees who earn an average of $50,000 or less per year. Because the eligibility formula is based in part on the number of FTEs, not the number of employees, many businesses will qualify even if they employ more than 25 individual workers.


It’s also worth noting that employees seek out employers who provide health coverage. In fact, results from a recent Small Employer Health Benefits Survey indicate that the majority of small business owners are aware of the positive impact of health insurance:


• 78% said it increased loyalty and decreased turnover;

• 75% said it helped employee recruitment;

• 64% said it increased productivity by keeping employees healthy;

• 62% said that employees demanded or expected coverage;

• 58% said it reduced absenteeism by keeping employees healthy.


Myth No. 2—Health Insurance is too Inflexible

No two small businesses are alike. Insurers are keenly aware of this, and that’s why many are more than willing to build customized plans based on pertinent factors such as a company’s size, industry, and employee demographics.


Plans can also be customized based on cost constraints and coverage needs—both in terms of geography and benefits to be provided.


In short, small business owners should not assume that health insurance resides in a one-size-fits-all world.


Myth No. 3—Health Insurance Brings an Administrative Burden

While it would be untrue to claim that health coverage is free of administrative requirements, insurers and providers have taken significant steps to lighten the paperwork load on small business owners.


In fact, the responsibility for billing, claims, and even insurance orientation for new hires, is likely to land on the desk of someone other than the small business owner. For the few administrative tasks that remain, most can be completed using point-and-click online interfaces.


If you’re still hesitant to take the insurance plunge, contact your broker who will be happy to help you further separate fact from fiction.





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Susan Peters