Modern Benefits for Healthier Teams & Stronger Businesses
Every business is unique.
That’s why it’s important to explore different options to provide benefits to your employees. As a small business, you have options. Traditional health insurance, known as fully funded health insurance, is a great option for some businesses. A fully funded plan gives you rate stability and easy administration options. It also often pairs with a network employees recognize. However, this isn’t the only option. Small employers have several options depending on their employee demographics, locality, and risk tolerance to provide great benefits to attract and retain top talent. Keep reading for a high level overview of some creative solutions we offer.
Level Funded Small Employer Plans offer greater savings potential to employers, while still limiting the risk of catastrophic claims. To understand how a level funded plan works, we’ll cover a couple definitions.
Fully Funded Insurance: When you pay the insurance company to “own” your risk. The insurance company analyzes the risk and sets a premium amount they expect to cover claims, admin, and some profit.
Self-Funded Insurance: When a company completely “owns” their own risk. This means the employer pays all claims out of a pool of funds they set aside. Some of those funds may come from employee payroll deductions.
Stop Loss Insurance: This is a type of insurance plan that sits on top of another plan that only covers losses above a certain threshold (an attachment point). Stop loss policies have specific and aggregate attachment points.
A level funded small group plan is a hybrid of fully funded and self funded. Most companies that are “self-funded” are actually level funded and have a Stop Loss contract in place. Employers who have the risk tolerance and financial ability to explore level funded plans can implement strategies to lower claims costs and potentially receive a refund of a portion of their unused premiums.
Individual Cover Health Reimbursement Arraignments are another option for small business owners to help employees pay for health insurance. HRAs can be set up and structured in a number of different ways. Here we will focus on setting up an HRA for an employee to use the funds to purchase individual health insurance. For employer under 50 full time equivalent employees, this can be a great way to control costs and give your employees autonomy to choose the plan that works best for them.
A couple important points to know about ICHRAS.
- Formal structure matters so the funds are not treated as income by the IRS.
- ICHRAs are technically a self-funded health plans, and IRS filing requirements and PCORI fees apply.
- Partnering with a broker that understand both group and individual health plans will get you and your employees the best outcomes.
Health Savings Account contributions are another way you can help your employees pay for healthcare costs. There are a lot of benefits to Health Savings Accounts and they can be a great addition to your employee financial well-being.
Only eligible individual can contribute to a Health Savings Account. If an employer contributed to an ineligible person’s account, it could result in penalties to both the employer and the employee, so understanding these rules is imperative. Here is an overview of important factors:
- To contribute to an HSA, an individual must be enrolled in a qualified high deductible health plan. This includes if someone, or a company, is contributing on their behalf.
- This type of arrangement would fall under a section 125 plan under IRS guidance; plan documents need to be created and non-discrimination testing needs to be completed annually.
Disclaimer
Beyond Health employs licensed insurance producers authorized to sell life and health insurance in Utah, Idaho, Wyoming, Colorado, Montana, and South Carolina. Our activities comply with state licensing requirements and partner carrier guidelines.
Product availability and enrollment options may vary by state. For more information or questions, please contact us directly.