What Can Your Small Business Do about Healthcare Benefits?
Healthcare and insurance continues to be a quagmire for millions of people to wade through today. If you are an employer with any number of employees, healthcare benefits are on your mind, too.
Why do employers even think about providing health benefits?
As always, wanting employees to be healthy is both a personal and professional concern for employers. Most all people wish good health for everyone. But when there is as intimate a relationship as employer/employee, that wish is even stronger. There is greater concern for the well-being of people you know and care about.
As a small business owner, there are also professional considerations:
- Attendance and performance – when workers (and their family members) are healthy and strong, they don’t miss work and perform their duties consistently.
- Benefits engender loyalty – when workers can count on employers for helping with their personal aspects of life, like healthcare and retirement, there is a greater incentive to remain at their job.
- Reduced costs – when there is reduced employee turnover and employees don’t miss work, the employer enjoys reduced training and hiring costs, which can be enormous.
- Increased customer service – long term employees provide customers a sense of security and the perk of institutional knowledge if something goes wrong. Having a history between customer and company builds trust and customer loyalty, too.
What will the requirements for employers be?
We can safely say we don’t know. That’s for two reasons. First, nothing is settled in the federal government and second, healthcare, insurance and everything about it is constantly in a state of change. Just like the ever-changing rules and regulation from the IRS are a good reason to outsource payroll and bookkeeping, healthcare and benefits issues are equally as volatile and complex.
In fact, you may want to know about some options available besides group health insurance.
What about unique service plans like direct pay primary care?
Besides the variety of health insurance products, there is another trend emerging. Under many different names such as direct pay primary care, direct managed care, or direct pay medicine, clinics are popping up that operate out of the circle of insurance and provide basic or routine medical care.
The way these work is that an individual or family pays a (relatively small) monthly fee to the clinic. Family members covered under the fee (or subscription) pay a small co-pay for each appointment. There are typically reduced costs for lab tests and radiology testing.
The concept is like car insurance. You get auto insurance for the major expenses and pay for the routine car care and maintenance yourself. In healthcare, that would mean you pay for visits when you are sick with the flu, and use your insurance for major illnesses and injuries.
What about HSAs and MSAs?
Health Savings Accounts (HSA) are not subject to federal income tax at the time of deposit. To be eligible, a worker needs to meet criteria including being covered by a High Deductible Health Plan (HDHP). Employers and employees can make deposits into an HSA. In order to use the money in the HSA without penalty, or incurring a tax, it must be used to pay for medical expenses.
For people covered by Medicare, or those who are self-employed or an employee of a small business, a Medical Savings Account (MSA) can be established. An MSA is similar to an HSA in many ways, including having to be covered by an HDHP. However, for an MSA either employers or individuals can make deposits into an MSA, not a combination of both. The maximum annual contribution is different, and there are different rollover rules for each at this writing.
It is important to confer with your tax professional before setting up either type of account so it is handled appropriately.
Establishing health care benefits is a complex undertaking
There is a myriad of options available and many choices to make.
Whatever decisions you make about providing any type or amount of healthcare benefit to employees, make it less complicated for yourself – for deposits, recording, and year-end reporting – by using a professional payroll service like The Payroll Department. We take care of the process each payday and then the year end reporting to employees, accountants and the appropriate governmental agencies.
Employers want to do what is right and best for their employees. That’s not always easy – especially when your concentration is primarily set on building a successful business so you can have employees. Call The Payroll Department at 317-852-2568 or contact us electronically to see how we can help.
Teresa Ray, Owner
The Payroll Department
