How Can Small Business Owners Lower Healthcare Costs?

There’s bad news for small business owners: Health insurance costs continue to rise and the number of companies offering health insurance isn’t going up either.

According to a recent survey by the Kaiser Family Foundation, small business owners experienced the biggest annual increase in family plan premiums since 2004, up 8 percent. Additionally, individual premiums increased 5 percent.

Increased premiums puts small businesses in a tough position. Do business owners foot more of the bill? Or do they just decide to not offer the insurance?

If there is any positive news for the small business community, it’s that small businesses are contributing toward health insurance substantially more than big businesses. According to the survey, small businesses paid 84 percent of premiums on average, compared to big business’ 35 percent.

Still, the problem at hand is the rising costs of insurance. If it continues at this rate, your small business could be in trouble financially.

So how can you keep those costs down?

Explore high-deductible plans combined with a health savings account

First off, high-deductible plans tend to be the cheapest option to offer your employees.

But the more important part of this option is the health savings account. An HSA forces your employee to think about the cost of their healthcare instead of just you. How do these work?

HSAs let your employees with high-deductible health insurance plans use pre-taxed employee money to help pay for any uncovered medical costs. The best part about this money is that it carries over year-to-year. So if an employee has no medical problems one year, but suffers a traumatic injury the next year, he or she will have plenty of money in the bank — if they planned accordingly — to cover anything their high-deductible plan doesn’t cover.

As the small business owner, you can decide if you want to help contribute to your employees HSA account, in addition to paying for their high-deductible plan.


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Wellness Programs

A unique way to lower healthcare costs and offer your employees some neat incentives along the way is through a wellness program.

The purpose of a wellness program is to educate and motivate your employees to live a healthy lifestyle. In return, insurance companies will typically lower the cost of the premium.

What are some examples of these wellness programs? You could strike a deal with a local gym and pay for an entire or a portion of a membership. Gyms tend to have expensive memberships, swaying people away. By paying for these memberships (and you can typically get a good corporate rate), your employees will be encouraged to work out more.

Other options include holding educational seminars about making healthy choices, including how to plan healthy meals and exercise correctly. You can also hold annual doctor screenings in your office, provide healthy snacks in the office’s lounge and hold 30- or 60-day health challenges, that allow employees to have fun with competing in performing healthy-oriented tasks.

Other money-saving ideas

HSAs and wellness programs are pretty typical money-saving ideas when it comes to healthcare costs. Other ideas include:

  • Flexible-spending debit cards: Similar to an HSA, FSAs are used for more limited purposes, such as dental, vision and other non-medial expenses. The other major difference is that an FSA is owned by your employer, while you own your HSA.
  • Cooperatives: You can team up with other small businesses to buy a larger product from a health insurer and as a result, lower your costs.

Andrew Dodson is a blogger that loves helping small business owners make the best decisions.

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