Many employers may not start thinking about health insurance until this fall, when open enrollment begins creeping up. But if your premiums got bumped up a bunch this year — and mine sure did! — you know that next year will almost certainly be just as bad. It’s time to start thinking about this now, because there are two big options you should at least explore.
Stipends. If you have fewer than 50 full-time equivalent employees, you aren’t mandated to provide insurance to them. However, if you do provide insurance, you’ll have to pay a significant portion of their premiums — in some cases more than 50 percent, says Cindy Brenke, a risk adviser at IBTX Risk Services, a business insurance provider in San Antonio, Tex. So, what’s a small-business owner to do, if you’d like to provide for your employees but want to protect yourself from rising costs?
Brenke’ s answer: Replace your insurance plan next year with a tax-deductible stipend that you determine, paid to each employee — including yourself. Everyone can then find insurance on the open market (see more on that below) and use the stipend to help pay for it. The stipend gives you the flexibility to pay as much or little as you can afford.
Brokers. The Affordable Care Act created federal and, depending upon where you live, state exchanges, where people can shop for individual or family health insurance. But remember, they aren’t the only place to do that. An independent insurance broker has access to all the insurance carriers and policies available in your state, including the ones on the individual exchanges, says Brenke. A broker can help you zero in on a policy that best fits your healthcare needs and your budget. And because the insurance companies pay brokers’ commissions, all policies include their fee, whether you use their services or not. I did something similar last year. With the help of a broker, I bought insurance through a national organization of financial services professionals. This route saved me almost $4,000, compared with what was available to me on the market for a one-person policy.
Discuss! You must! Start the conversations with your personal accountant, your company’s directors and employees and your family to see what course of action makes the most sense for you. Your employees may not be thrilled with a major change, of course, but they’ll be happy you made a decision that keeps your business solvent and keeps them employed.