3 ways small businesses can save on health insurance costs

Did you know the annual health insurance premium for an average family in 2017 was nearly $19,000?

If you’re a business owner who already offers coverage to your employees — or even if you’re just starting a business and need to pay for your own insurance — you’re almost certainly aware that these costs continue to rise, with seemingly no end in sight. And you’re probably frustrated about it, too.

After all, insurance coverage impacts your business beyond your finances and the health of your staff: Surveys have shown that employees consider it a key factor in not only deciding where to work, but also whether to stay.

When you’re running a business, there’s a delicate balance between providing health insurance and keeping your costs manageable. How can you save money while still doing right by your employees? Here are three things to consider:

1. Offer a plan with a health savings account (HSA). HSAs are gaining in popularity — and because they’re available only with high-deductible insurance plans, they may present an opportunity for your business to lower costs. These accounts have a lot of advantages: Employee contributions to them can be deducted pretax from employees’ paychecks, interest and investment gains aren’t taxed, and if the money is spent on eligible items, withdrawals aren’t taxed either. Both employers and employees can contribute to the accounts, and an HSA moves with employees if they switch jobs. While it’s true that high-deductible coverage can mean more out-of-pocket costs for employees, premiums are typically lower; the idea is that an HSA will help to cover the additional expenses.
   
   
2. Encourage healthy behavior. Workplace wellness programs continue to grow, with some providers claiming they can reduce employee absenteeism, improve morale, and lower health insurance costs. The research is mixed on whether these programs actually have an impact in the short term, although some believe positive results will emerge over a longer period. It’s never a bad idea to try to help your employees boost their wellness — according to a 2012 study, those with high overall well-being have far lower health-related costs than those who are “struggling” or “suffering.”
   
   
3. Look at all your options. You might have more choices than you think. Shop around to see if you can find the same or similar coverage for a lower price than you’re paying now. Consider joining a purchasing cooperative with other small businesses, which could lower costs or provide additional features. Learn more about offering options such as telemedicine and nurse hotlines, which can be more convenient and also less expensive than doctor visits. Finally, you also can require employees to contribute a greater share of premium costs. They likely won’t be happy with that decision, but be as transparent as possible — if you’ll still be covering a large share of the cost, be sure to illustrate the breakdown. That can create additional understanding.

Still wondering what to do about your health insurance? Check out this post from Fundera on how to pick the best plan for you. And as premium costs continue to rise, it’s always good to make sure you’re streamlining other parts of your business to save both time and money — especially things you can automate, like calculating and collecting sales tax. Check out Avalara’s solutions for small businesses here.