A recent survey revealed 72% of small businesses are concerned about employee healthcare expenses. Where previously smaller businesses offered limited or no benefits, they now must comply with Affordable Care Act (ACA) regulations.
Fortunately, small business owners can potentially reduce employee healthcare costs while remaining ACA-compliant. Here are three ways:
Claim the Small Business Health Care Tax Credit
This small business credit helps employers who have fewer than 25 employees. It ensures that your employees have coverage and that you are able to cover the resulting costs.
Targeted to businesses with low- and moderate-income workers, the Small Business Tax Credit could be worth up to 50% of the premiums you pay. However, you must qualify. This means that those companies with fewer than 25 full-time equivalent employees (FTEs), that contribute 50% or more toward each employee’s health insurance premiums, and that purchase their employee coverage through the Small Business Health Options Program (SHOP), can apply for the credit. The average annual wages paid must be lower than $50,000 (which is indexed annually for inflation).
Note that while many small businesses could get a break of up to 50%, tax-exempt employers are limited to 35% of the premiums paid.
Negotiate using your insurance agent’s expertise
Annual renewal premiums can be negotiated and lowered, and successful negotiations odds increase when you work through your insurance agent.
When renewal premiums increase, insurers usually point to a jump in employee claims and other factors that are pushing up costs. Provide your agent with statistics and other information that will help him or her negotiate around these factors with the health insurer. The more information you provide, the more negotiation leverage your agent has. For example, your agent may learn from you that a wellness program was implemented, meaning you may have a healthier workforce and reduced risks of claims.
Ask your agent what your business can do to prevent increased renewal premiums. Paid sick leave, for example, appears to reduce occupational injury claims by workers, according to the Centers for Disease Control & Prevention’s National Institute for Occupational Safety and Health.
Many insurance agents have signed agreements with the Small Business Health Options Program (SHOP), and your agent can help you manage and compare plans by signing a SHOP agreement. As mentioned above, the SHOP can be a good way to acquire coverage for your workers. SHOP is available to employers with fewer than 50 FTEs. As well as giving you access to tax credits, SHOP may reduce some of the administrative work that can be costly in terms of time and money.
At the same time, many small businesses prefer to work with other insurers. Your insurance agent, who knows you and your company and can negotiate on your behalf for lower premiums, is always the best way to go, whether you SHOP or opt for a plan with another insurer.
Your agent is in your corner. Make the most of this trusted relationship.