Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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8 Ways To Protect Your Business With Health InsuranceManaging the costs of running a business can be difficult. It may be tempting to start cutting costs in the area of health insurance.

However, cutting your health insurance expenditures may actually put your business at risk instead of providing the extra resources you are hoping for.

Find the health insurance plan that best fits your needs now when you enter your ZIP into our FREE search tool provided on this page!

Protecting your business is critical in today’s economic situation. Here are eight ways that having health insurance can actually do that for you.

1: Tax Benefits

There are actually many tax benefits that a business owner can take advantage of by having a health insurance plan for themselves and their employees.

You may be able to save on your income tax, federal tax and employment tax by purchasing health coverage for your employees.

Before you decide to make any cuts in regards to your health insurance, it is wise to sit down with your accountant. This will allow you to see if this move will end up saving or actually costing you money in the end.

Protect Your Business With Health Insurance

The Small Business Administration has prepared a complete journal of information on these laws of taxes and credits.

If you are a small business with only a few employees or are self-employed, then you will have to follow certain rules in order to obtain the benefits that may be available to you from the government.

The SBA journal states the laws and terms for you to follow in order to take advantage of these benefits.

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2: More Productive Workforce

A healthy workforce can be more productive and therefore, generate more profits for your business. This also creates a more stable relationship between employees and the employer.

How To Protect Your Business With Health InsuranceWithout health insurance, employees are less likely to go to the doctor when they get sick. This means that they are generally ill for a longer period of time. This leads them to take more sick days off from work and to spread some illnesses to other employees.

If they are out on sick leave that means that they are not being productive to your company. In fact, they may be even costing your company more money.

3: More Desirable Workplace

When you can add a health insurance plan to an employee’s benefit package, you are creating a more desirable place to work. This leads to employees that want to stay employed at your business and therefore reduces your turnover rate.

Again, this saves a great deal in company resources.

Peter Lynch of BusinessandtheGeek.com has gathered some staggering statistics concerning the workplace. Some of these include the following:

  • 58% of those in the workplace worry about their benefits
  • 46% of all new hires will leave their job within the first year
  • 63% of all employees who do not feel they are treated with respect will leave in two years

These statistics greatly affect the bottom line of a company. By creating a more desirable workplace, you will drastically reduce the turnover rate and save money.

4: Stabilize Employee Wages

When an employee receives health insurance as part of their employee benefit package, in many cases they will accept a lower salary and actually expect fewer raises because they know the expense the company is going through in order to provide them with their health insurance.

By providing health insurance, your employees’ take-home pay needs will be significantly reduced as they no longer have to pay for individual coverage.

To learn more about the national average of wages including the additional cost of health insurance view the information that Bureau of Labor Statistics  recently released.

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5: Save Money

A business can save money by choosing to spend money on health insurance. As mentioned above, there are the tax benefits and the savings on employee wages. However, one of the main reasons employers spend more than they have to is because they do not understand the different health insurance options and end up purchasing a plan that does not meet their needs.

By understanding the different options available, you can pick exactly what you need. This will allow you to spend your dollars more efficiently for both your company and your employees.

You can find a gamut of companies with various plans and premium rates to match the service they are offering. Below are the main types of health insurance that you should be aware of:

  • Types Of Health Insurance To Protect Your Business

    HMO (Health Maintenance Organization) – This is the most reasonable choice. It deals with your primary care doctor who refers you to the required specialist. This has a limited scope because some doctors choose not participate in this. Some people also scoff at this plan because they do not like seeing their primary care physician in order to get a referral to a specialist.

  • PPO (Preferred Provider Organization) – This is a more advantageous network because it doesn’t require a referral from your primary care doctor to see a specialist. Even though this network offers you financial benefits, it also involves some out of pocket limits. Some find this more convenient because it offers a direct and faster service than HMO.
  • POS (Point of Service) is a combined plan offering the benefits of both HMO and PPO. With this plan, you are offered a decent network of doctors and specialists with a facility to choose primary care provider for yourself. It is a feasible plan with no deductibles and nominal co-payments. However, if you plan to go out of this network, the repercussions come with high deductibles and co-payments.

There are highly desirable plans you may wish to offer your employees in which they can put money aside in a savings account with a tax exemption for medical care.

This money is then used for doctor’s visits, prescription drugs or any other medical treatment. These plans are quite flexible while making payments to your health expenses.

Here are descriptions of the plans:

  • Health Insurance Types To Protect Your Business

    HSA (Health Savings Account) is a most flexible plan, but demands high deductibility. Both employees and employers can contribute this plan annually, and it is tax-free. If you don’t use it then your funds stay with you but you will be charged an income tax on them.

  • HRA (Health Reimbursement Arrangement) is different from an HSA, as it can be only be funded by an employer, hence provide no account portability. In this plan, the employer stays in rollover rules control and doesn’t have annual contribution limits.
  • FSA (Flexible Spending Arrangement) is funded by the employee with pre-tax dollars and the employer has the authority to fund it also. However, if the funds are not utilized before 15th of March every year, then the money becomes non-refundable and retained by the employer. Besides that, these funds are neither portable nor available to be used for non-medical expenses.
  • MSA (Medical Savings Account) is quite similar to the HSA plan for the case of self-employed individuals.

It can be very overwhelming choosing a health insurance plan. ConsumerReports provides additional information on how the different healthcare plans are ranked.

6 and 7: Business Growth and Stability

Another benefit to small businesses that many do not think about is that once you have a health insurance plan in place. It allows you to grow your business and increase the number of employees in a much easier fashion.

Many health insurance providers actually provide better rates for the more employees you have.

So as you add employees, your productivity will increase outweighing the financial cost to providing them the health insurance.

Advantages Of Protecting Business With Health Insurance

This is probably one of the biggest advantages. When you have happy employees that feel like they are being fairly compensated, they will stay employed with you longer and create a friendly, more productive work environment.

These things actually all work together to create a more stable work environment and can actually extend out into the community as well. In this period of economic uncertainty, this can be invaluable.

8: Peace of Mind

There are additional benefits that come in terms of peace of mind when you add health insurance to your small business.

The benefits that a self-employed individual receives by providing themselves health insurance through their business are numerous.

Not only will you receive tax benefits but also you are actually creating an environment that will be less stressful. Your health insurance will be there to cover any sickness or injuries that you may sustain and, therefore, you will not have the tension of continually worrying about if you were to become ill.

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Additional Tips for Saving Money on Health Insurance

Finally, many business owners are uncertain of the future of their business at this time and with healthcare reform coming into play. It is difficult to know which direction to turn when it comes to providing healthcare for your business.

However, there are ways that you can save a significant amount of money that will give your business the financial boost it may need but also continue to enjoy the benefits provided.

The following tips will help your business save money on your health insurance:

Benefits of Business Health Insurance for Employees

While purchasing health insurance, you should check for the rate guarantee as most of insurance providers periodically increase their rates. Some insurance companies will entice you with extremely low rates to only raise the cost significantly after you have locked into using one of their plans. By avoiding this with a rate guarantee, you can save your business both time and money.

  • Always go for a licensed broker who deals with several different reputable insurance companies to help you find companies offering rate guarantees.
  • Always think in the long-term and explore your options to receive better choices for long-term benefits.
  • Negotiate with your medical care provider and you may be able to save up to 30% on your medical bills.
  • Always consider getting coverage for generic-only prescriptions because it will save you on your monthly premiums. Be sure that your prescription card includes drug stores in your area.

If the recommended plan for you is a HSA (Health Savings Account), you will be able to save your pre-tax income in a savings account and use those funds for big medical expenses. The advantage is that the unused money can be invested.

While considering the ideal health insurance plan for your business, make sure that the selected insurance plan covers everything you or your employees need. Do your research and carefully consider all the options for plans that are presented to you in order to make an informed choice.

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