How SMEs Can Reduce Employee Health Costs

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.

SHOP

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.

Does Your Business Need Specialized Coverage?

Sometimes general commercial liability insurance is sufficient coverage for your business. But, depending on the type of business, your company may be facing potential risks that aren’t covered by typical policies. It’s critical to review risks with your commercial insurance agent to see whether you need specialized commercial insurance products. Here are just a few examples illustrating how unique needs may require unique protection:

International liability insurance: Regardless of whether you or your employees actually work overseas, if your business sells or buys abroad, you may want to consider this coverage. Traditionally, commercial policies only provide coverage for claims occurring in the U.S. To cover claims abroad, you’ll need this policy.

Valuable papers insurance: Despite the prevalence of electronic storage, almost every business works with some important paper documentation. General commercial policies typically limit the payout if valuable documents are lost or damaged, and may ask for a list of documents to be covered. Financial businesses as well as law offices, design firms, or businesses handling antiques or collectibles may all need to purchase valuable papers insurance.

Kidnap and ransom insurance: Unfortunately, kidnapping for ransom isn’t confined to large corporations. Particularly if you or your employees regularly travel overseas, your small business may need this policy. The policy reimburses your business for kidnapping and ransom expenses required to safely recover you and/or your employees in a kidnap situation. Not every business needs a complicated kidnap and ransom policy, but you may need a simple version. Discuss it with your commercial insurance agent.

Go Green: You’ll Reduce Your Car Insurance Rates

Ever wonder why others pay so much less for insurance than you do? It could be they’ve gone green. By making environmentally focused choices, you can save money on car insurance and feel good about it too. Here are some suggestions for green savings:

Car sharing programs are becoming increasingly popular. Those who don’t want the responsibility of being a car owner but occasionally need to drive can participate in a car-share program and save up to 50% with nonowners insurance.

Buying hybrid cars means discounts. Many insurers provide instant discounts for eco-vehicles, as they score high on safety tests. Usually compact and lightweight, they cause less damage in accidents, so insurers pay out less in claims-all meaning lowered risks to insurers and cheaper premiums for policyholders. Statistics also indicate the majority of eco-car owners are safe drivers, and hybrids are statistically less likely to be stolen.

Cut back on your driving. Try taking public transit or walking or biking to work. This allows you to change your vehicle’s use on your policy to “pleasure.” Pleasure-rated vehicles reduce claims risks, since they’re not on the road as much, meaning lower rates. And that alone can mean a discount of 10%-15%.

Green-minded drivers who drive less also make great candidates for pay-as-you-drive insurance (PAYD) policies. Also called usage-based insurance, this can reduce premiums. Almost two-thirds of hybrid owners, for example, drive 40 miles or less daily; PAYD may make sense for them.

Monitor ‘Attractive Nuisances’ for a Safe Summer

Some common backyard activities may lead to claims and lawsuits. Don’t spoil your summer. Here are some activities you may need to insure against:

“Attractive nuisances”: Seventy percent of drownings happen in the summer and occur in backyard pools. A backyard pool is just one example of what insurers call “attractive nuisances”-items that pose great potential danger and are particularly interesting to children. This category also includes ponds, fountains, trampolines, and swing sets.

The solution: Raise liability limits and get umbrella liability insurance. Some insurers will require safety measures; ignoring this could mean cancelled policies or denied claims.

Summer soirees: You’ve gathered friends and family for a barbecue, complete with wine spritzers and beer. But remember: If alcohol-related accidents happen during or after your party, you’re liable for damages in most states.

More than 40 states have host liability laws, making hosts responsible for guests injured-or worse-from consuming alcohol. And more than 35 states have host liability laws that specifically pertain to third-party property damage or injuries stemming from alcohol consumed at your home/party.

Don’t leave alcohol in the open, ensure drinkers are of age, and don’t push your friends to drink more. Consider taking their keys on arrival. Ask your agent about your state’s regulations and be prepared to increase your liability limits.

Grills and fireworks: Fire risks increase in summertime-just consider that grills alone cause roughly $35 million annually in property damage, and fireworks account for two of five fires reported on Independence Day. Set off fireworks as far from your home as possible, and don’t place your grill too near porches or trees. Also have fire extinguishers nearby, and ensure you’re aware of local fireworks regulations.

Confirm you have adequate liability, property damage, and medical coverage. And don’t forget to ask about coverage terms if someone else causes damage or injuries.

Even Healthy Women Should Consider Coverage Needs

When choosing an insurance plan, it’s important to find one that meets your specific needs. The Affordable Care Act covers at least one well-woman exam per year, but that’s not the only health service women need. Even healthy women should consider the following:

  • If you’re thinking about having children in the near future, maternity coverage is an area where it’s worth looking more closely at your alternatives. While all insurance plans are required to have some type of maternity coverage, it varies from plan to plan. Consider the options you need and compare plans according to the specific services. Check with your agent about specific limits.
  • If you have children, another area of coverage that may impact you and your family is children’s insurance. Your child/children can be covered through the Children’s Health Insurance Program (CHIP), if you qualify for Medicaid. But even if you don’t meet the requirements for Medicaid, your children might still qualify for CHIP at a lower cost than under the average health insurance plan. Benefits vary by state, but all plans include important items such as checkups and immunizations.
  • And finally, it’s important to look at mental health coverage. Being in good health includes not only your physical well-being, but your mental and emotional fitness as well. According to the National Alliance on Mental Illness, women experience depression at twice the rate of men, and depression can affect your overall health.

Disability Coverage Can Save Your Small Business

According to the Bureau of Labor Statistics, 14.4 million Americans were self-employed in 2014. While running your own business brings many benefits, one of the downsides is the lack of disability coverage usually provided to employees who work for bigger companies.

And, while we wouldn’t dream of failing to insure our homes, many small business owners don’t consider the implications to their business if they become ill or are seriously injured. Many small business owners need individual disability coverage.

The U.S. Social Security Administration recently estimated that a typical 20-year-old had a one in four chance of disability before the age of 67. While Social Security is a safety net, it often takes months or even years to obtain benefits approval through the current system. And once you do get it, it’s not a great deal of money.

If you depend on two incomes to pay your mortgage and run your business, what happens if your partner cannot work due to illness or accident? An individual disability plan may mean the difference between closing your business and continuing to make your monthly payments while you or your partner recover from illness or injury.

Much like life insurance, individual disability plan rates are based on specific factors such as age, gender, health, the benefit amount, and how the policy defines disability.

Even if you have an employer-sponsored plan, you may choose individual supplemental disability coverage as a bridge to transition from a full-time salary to a reduced income. For example, your employer-sponsored plan may pay 60% of your income. A supplemental plan can increase that amount for a small monthly premium.

Your insurance agent can help. He or she will assist in evaluating your financial situation and determining how much income you will need to maintain your lifestyle after a disabling event. For many small business owners, this coverage can save the company.

Healthy Living May Make You Wise…and Wealthy

Some life-insurance companies are nudging policyholders in the right direction by adding rewards for healthy living choices. And others may soon follow.

Statistics point to a virtual epidemic of unhealthy habits in many sectors of the American population. For example, among Americans ages 20 to 74, more than a third of both men and women are considered obese.

Almost 20% of adults smoke, and smoking is the leading cause of preventable death, according to America’s Health Rankings (AHR). AHR also found in a study that 25% of Americans reported that they didn’t participate in any non-work physical activity (not even walking) over 30 days.

Healthy behavior monitored: John Hancock, a major life insurance company, recently announced a program called Vitality, designed to tackle these unhealthy stats. Policyholders can save on insurance premiums (10% or more, in some cases), and earn rewards with a number of participating retailers, for engaging in healthy behaviors such as getting annual health screenings, losing weight, and taking online health courses. They receive health goals and can track their progress online. Plus, the program provides them with a free Fitbit device to monitor physical activity. The goal is to collect sufficient points to reduce premiums.

Premium savings: A recent post in a Wall Street Journal blog provides this example from John Hancock: “(With sufficient points,) a 45-year-old couple, each buying $500,000 universal-life policies, could save about $25,000 on their premiums to age 85…and even more if they live longer than that.”

John Hancock is partnering with the Vitality Group, a global company that teams its wellness programs with life insurance in the UK and Australia. Another insurer, Accordia Life (Aviva), also offers a Wellness for Life program with similar objectives. There are some concerns about privacy issues inherent in programs that seek health data from participants, but the overwhelmingly positive focus on health may encourage other insurers to develop similar approaches.