What options to consider when offering Health Insurance as a small business

All right, we had a video recently about helping you attract and retain amazing employees. And by doing that, you might need to offer benefits. And we kind of did a really high level overview. We'll make that video available as well if you're just finding this one. But what we wanna dive into today is health insurance. We wanna talk about different ways you can get health insurance and different options you have as a small business owner. So if that sounds interesting to you, please stay tuned. Remember, this is the Clara CFO Group channel. We're here to help you in your small business. Please make sure you're subscribed to the channel so you can get more information that will help you as you grow and scale your small business. Okay, so we're just gonna get into a couple different options you have. Let's say you are growing a team and you said, hmm, I think I wanna start offering some type of health insurance benefit. People are asking about it. I think I should. I'm not sure if I can afford it. I don't know what the options are. This video is for you. This is why we're here. We're here to help you walk through what some of your options are. The first and kind of most traditional way to get health insurance for your organization is through a group insurance plan. So a group health insurance plan is, or program, it's also known as an employee-sponsored program. These are kind of what you would get if you were going to work for a medium to large-sized company. You would be signing up with something like Blue Cross Blue Shield and you would go or they would give you three to five different options and you would select the plan that was good for you. That's if you were an employee and you were going to sign up you're wanting to offer that for your small business. So that would be a signing up for one of these group health insurance programs. So it is possible to get that for your small business. One thing I've run into is that you do need to have at least two people to have a group. And sometimes that does not include the owner. So it can be a little tough as you're just getting started and maybe you wanna hire a super stellar employee right off the bat and they need health insurance. This can be kind of a tricky thing to go straight from like a solopreneur directly into a group program. There are options out there where you can get a group program for only two employees but it can be a little bit challenging and it can also potentially be quite expensive if you only have a couple people because the way that they're gonna price it is they're gonna look at the people in your census which is the people, your employees on your list. And it's gonna be based on their demographics, their age and their gender. And then it's gonna price out a group plan based on just whoever's in your mix. So if you have kind of more people in more expensive demographics, let's say over 60 or women in their 30s, let's say late 30s or whatever it is, there's some higher demographics than some lower demographics. And so you could potentially, the average of the risk is what determines the price. So just keep that in mind, it's totally worth going and trying to seek this out. I highly recommend working with a broker that might be able to guide you to a certain plan that might be more affordable. And they might also know of some other deals that might be able to be had when it comes to group programs. We're gonna get into some other options for finding group health programs as well. So if you do go with one of these group programs, what happens is you will select a few options for your employees. And it might be three options where you can maybe give them a wider range. Maybe you have a HSA high deductible plan and then maybe one with a lower deductible and then kind of more of a mid range, mid tier. You can decide based on your budget what you wanna offer. And then from there, you will also decide how much you wanna cover as the employer and how much the employee needs to cover. And then you would get signed up with everything and the broker or the insurance provider would be able to help you through those steps. But that's kind of the traditional, if we're gonna think of like big business, traditional way to offer health insurance. So that's the more traditional way of providing health insurance. I'm going to tell you what I'm seeing for small businesses, the little bit more accessible way of providing a group program. And that's in this second way. So there's another way to get kind of the benefits of a larger group program as a smaller employer. And that's by going through a larger organization that you can kind of sort of attach yourself to, if you will. I had this happen in Washington State where there was like a Washington Business Association and we were looking for a group program and we only had three employees that needed health insurance and it was a way for us to kind of get access to better rates. We joined this Washington Association, which then helps get access to a better deal on group insurance because it essentially created a bigger risk pool, which drove down our premiums. And so that was a really interesting option and that's something you could look into in your state. A broker might be able to point that out to you or maybe some research with other local business owners to see if something like that might be available. You can also use something like a PEO and we're gonna have a video on a PEO in a couple weeks, I think either next week or the week after, which we'll talk about more in detail. But a PEO is also a organization that can help you get access to kind of larger negotiated contracts on group programs as a small employer. So there's a couple ways that you can still get access to big plans and access to potentially better coverage for your employees by kind of hooking on to some of these other organizations as a small business. Now, one of the things that I see as one of the most beneficial ways as people are starting off and trying to grow from just solopreneur to a couple employees is offering something called a Health Reimbursement Arrangement, HRA. And these are QSERAs and ICHRAs. And we're gonna get on to lots of acronyms over here. I'm not even gonna explain all of those, but an HRA, Health Reimbursement Arrangement, is a way for employers to pay or reimburse an employee for their healthcare expenses in a way that's tax-free to the employee. So I have seen some people just try to like pay for, pay kind of a stipend for health insurance. Hey, you get $400 a month to their employees for health insurance. But what ends up happening is that if you don't set that up correctly, it becomes a taxable event for the employees. So they're actually getting less than they should for their health insurance. If their premium was $400, they're not actually getting $400 to pay for their premium if it's getting taxed at 25 to 30%. So what we wanna do is we wanna make that a tax-free event for the employee, and you can do that through an HRA. And the really great part about that is that it's a great way to scale when maybe you can't or you don't wanna do a full group program or maybe you have too much fluctuation in your employees and, or maybe you have some part-time people you wanna give a benefit to and some full-time people. And HRA is a great way to be equitable to all of your employees and allow them to get reimbursements for co-pays, health care premiums, and even other medical expenses as well. So it can cover a wide variety of expenses and you can reimburse employees for what they've actually spent on healthcare. So that's even better than trying to give somebody a stipend for going out and buying health insurance because what if they never actually went out and bought health insurance? You actually didn't help them. You just gave them an extra $400 every single month. So this gives some accountability to what they said they were gonna do. And this is a great program. And I will put a link in the description box below to a company that I've had clients work with. I'm actually working with them now and they are not sponsoring this video, but they are a great resource for getting started with one of these HRA programs. So I think they're really great and a great way to give that benefit without having to manage a group insurance program and have all of that go through you as the employer. It's a really good, I think, stepping stone to providing health insurance. If you're not ready for a full-blown program, this HRA program is a great middle ground. And I just wanna have a note in here about HSAs, health savings accounts. Those on their own are not a health insurance program, okay? So you might be like, hey, what about HSAs? And I wanna say that an HSA is also something you can contribute to as an employer if your employee has an HSA and you can make that available to your employees. But it does need to be kind of combined with a high deductible insurance plan. So when you're selecting a group plan, so like when you're selecting, if you do go with a group program, you can choose a high deductible plan that if employees wanna opt into, you could also offer an HSA and you could even offer a contribution towards the HSA or a company match. But HSAs on their own aren't a solution for providing health insurance for your employees. So I just wanted to give you a quick note about that. Those are the ways that you can provide health insurance to your employees as a small business owner. I hope this has been helpful to you. And please stay tuned and make sure you're subscribed to the channel because we've got other information about these things that can be kind of confusing and we're gonna try to break them down for you and make it really simple, okay? So thanks so much for watching and we'll see you soon.