In a time where large chain stores have become a way of life, the popularity of small, independent businesses is on the rise. From “mom and pop” restaurants and bookstores to bakeries and craft shops, small businesses are a big deal when it comes to employment. How can an employer and/or owner of a small business provide benefits and health coverage to his or her employees? Can a small business offer benefits to its employees that are comparable to its larger counterparts?
There are several points an employer can consider while trying to determine what benefits are best for the business.
Affordability – What can the employer afford to offer in the way of benefits? Some employers budget their finances to include expenses for employee health insurance, dental, vision, disability, life insurance and retirement accounts. Will the employer be paying all coverage costs, a set percentage or will the employee be responsible for the cost of his or her benefits? It is important to keep in mind that the higher the percentage an employer pays on benefits, the greater the expense to the business.
Employees – A small business owner will have to determine which employees are going to be offered benefits. Should all employees be offered coverage or just key figures such as managers and/or owners? Some insurance companies will only cover employees who work a set minimum number of hours. Once a person is employed, when should he or she be eligible for benefits? Some employers opt to cover employees immediately. Others establish a waiting period from thirty days to twelve months to ensure the employee is viable with the business.
Agents / Brokers – Insurance benefits are a complicated matter. Decisions about coverage should not be made rapidly or ill advised. An employer should consult with an experienced and knowledgeable insurance agent or broker who specializes in small business benefits. He or she will be able to answer questions and advise on what will be beneficial for both the employer and employee.
Health Plans – Health insurance has become one of the main incentives that attract an employee to accept a position with a company. Small businesses are no exception. How can an employer choose an affordable health plan that can be easily utilized by employees? An employer can begin by researching and comparing insurance companies. Each company will have different benefit plans. It is important for an employer to have an idea of what he or she is looking for. The health insurance plan should utilize a network of local doctors. How would an employee benefit from an insurance plan if the closest doctor in the network is over a hundred miles away?
If the employer is paying part or all of the insurance premium, there are different ways to lower the cost. Most group health plans allow the employer to choose the co-payments and/or deductibles. The higher they are, the lower the premium should be.
Dental / Vision Coverage – While some businesses elect to have separate insurance policies, other employers negotiate to have them consolidated. This means that it is not unusual to have dental and/or vision coverage included with other coverage such as health insurance. Vision care is becoming increasingly found as a benefit in health plans with many companies covering routine eye examinations and discounted eyewear options.
If an employer opts to purchase a separate dental plan, as with health care, it is important to weigh options. Consulting with an agent or broker will help the employer determine which insurance carrier and coverage best suits the needs of the company’s employees.
If a small business owner elects to pay a percentage of premium costs, there are ways to control expenses. Higher deductibles will help to lower costs. Most dental plans offer three tiers of coverage. Preventive (cleanings, x-rays, oral exams) and Basic (oral surgeries, extractions, root canals) levels are usually mandatory in dental coverage. While some plans require the inclusion of the Major (crowns, dentures) level, other plans will allow the employer the opportunity to elect or decline the coverage. Orthodontic coverage is also optional.
Life / Disability – Life insurance, short-term and long-term disability coverage is also important to employees. Small business owners can offer life insurance to their workers via a predetermined amount or as a percentage of the employee’s salary. Short and long-term disability coverage is also offered as a percentage of an employee’s salary. An employer should compare the costs of several insurance carriers. With an increasing number of insurance companies vying for business, costs can be competitive.
Retirement Plans – If a small business owner considers offering his or her employees a retirement program, he or she should consult with a financial advisor or the Department of Labor. The laws governing retirement plans are complex and need to be followed. One popular option an employer has is the Simplified Employee Program (SEP). This program allows small business owners to directly fund an employee’s Individual Retirement Account (IRA) without incurring the expenses of operating a company account.
A small business owner can elect to pay the entire cost of benefits, a percentage or can give his or her employees the option to purchase their own benefits, depending on the employer’s management technique and expenses. Benefits are highly valued by employees. Decisions pertaining to the benefits of a small business should be informed and thought through. (Source: tele-management.ca)
Contact us for San Francisco small business insurance advice at 415-512-2100.