“The only real mistake is the one from which we learn nothing,” said Henry Ford. Failing forward is something that sets apart successful small businesses from the rest. In fact, mistakes are often about movement and health—healthy things live, living things grow, and growing things change. But failure to change after the mistake has been made, as Mr. Ford points out, is the only true mistake. And when it comes to health benefits, failure to change is often a big mistake. With 9 million small businesses struggling to keep their doors open and 60% closing their doors for good, we have to learn from the mistakes that are causing small businesses to bleed. Thankfully, there is hope! There has never been a better time for small businesses to rethink the way they’ve always done health benefits. The following are the 3 most common mistakes small businesses make with health benefits.
1. Spending Too Much
Over the past decade, small businesses have been spending too much on their health benefits. The reality is businesses could save 30-50% by ditching their traditional group plan and opting for an individual health insurance plan.
What is an Individual Health Insurance Plan?
Individual health insurance plans are insurance plans from regular insurance companies that can be purchased on the Individual Marketplace—also called the “Exchange”—and they’re deeply discounted by IRS tax credits.
Why are Individual plans so much less expensive than traditional Group? Well, they have a little help.
Imagine having a coupon in your hand for the product you are about to buy, but instead, you crumple up the coupon, throw it away and pay full price instead. By not taking advantage of Individual plans and overpaying for those Group plans, you are throwing away big coupons!
Individual plans have tax credit discounts that dramatically reduce the cost of the products. Plus, individual plans have some serious advantages over Group plans even beyond the fact that they cost 30-50% less and have better coverage. For example, they are subject to COBRA and they are portable with the employee if they ever switch employers.
But it’s not just the over-spending that gets small businesses in trouble with their health benefits.
2. Spending Wrong
Let’s start by saying that there is no one-size-fits-all when it comes to health insurance. So if you are trying to pick one insurance product for your whole team, you’re going to inevitably leave some people hanging!
Why is that? Because everyone has different needs when it comes to their health. So why should an employer decide what plan works for their individual employees and families? It makes no sense.
Most employers in the U.S. will only offer employees one plan. And yet, health insurance is generally the second-highest line-item in the company’s budget.
What if the health benefits you offered your employees were not only more flexible, but also saved your organization money year-over-year?
Learn more about how Remodel Health’s ICHRA+® product can benefit your organization
Example: in general, is it better to rent or to mortgage a house? It’s way better to mortgage the house because you are essentially gaining equity with every single payment, whereas with renting, it is money entirely spent.
This is the same principle we apply to copay plans vs. HSA plans: Copay plans burn cash on “rent”, instead of investing them into Health Savings Accounts for the employees to build up over time. Meaning, small businesses need to stop overpaying on those Copay plans and instead, dump the saved money into health savings accounts.
What is a Copay plan?
A Copay is a smaller amount of cash you pay at the doctor’s office instead of getting billed later for a higher amount. Copay often does not apply to the deductible. Most people only go to the doctor 2 to 3 times per year and most people only hit their out-of-pocket max 5% of the time.
3. Spending Nothing
If you are contemplating not doing anything about your inadequate health benefits, you need to think again. The reality is, not only do employees need help with their healthcare costs, they want it, too. In fact, 56% of current employees will decide whether they leave or they stay at a company based on the quality of the health benefits you provide.
And this makes sense since the #1 cause of bankruptcy in the U.S. is healthcare bills. Not having insurance, or not having good enough insurance, continues to bring people all over American to financial ruin. Not having your employer there to help you is no longer a viable option for most employees.
So if you don’t offer anything for health benefits, then you need to rethink. Nearly half of all recruits will not join your team if you, a small business, aren’t spending on health benefits.
Schedule Your Demo to See How It Really Can Work!
If you find yourself making one of these mistakes, then it’s time to talk! Our team of licensed consultants would love to provide you with a risk-free health benefits analysis. When it comes to small business health benefits, there are more options available than you think! There has never been a better time to lower your costs, spend smarter, or start something for the very first time. Email us to schedule your demo and take your next step today!
Important Notice: Remodel Health does not intend to provide specific insurance, legal, or tax advice. Remodel Health always recommends consulting with your personal professional representative to properly evaluate the information presented and its appropriate application to your particular situation.