Choosing the best health insurance program for your company can be a difficult process. There’s so many different plans and options that are available, many with different requirements and underwriting rules, deciding which path to take for your business can certainly be challenging. But look no further, Holloway Benefit Concepts is here to help you understand the options that are available for your business based on your company size AND guide you down the path of having the best benefits possible for your company, year after year. Read on to learn about the different types of health insurance programs available and what makes them different.
Choosing the Right Benefits Program as a Texas Employer
As an employer and business owner, it is of high importance to have a benefits program in place that meets the needs of your company and your employees alike. From the business side, the program needs to be affordable and look good on paper, as it is a powerful tool when it comes to recruiting for a growing business. For your employees, you are going to want to have programs in place that add value and help them protect their families, making them want to stay with your company. Benefits aren’t just a recruiting tool, they’re also a retention tool.
It is essential to compare and contrast different funding scenarios before deciding which type of health insurance is the best for your business needs. But, before you can do that, you need to understand how the different options work. Let’s go over some of the factors you will want to consider when deciding on a health insurance plan for your business. And oh, by the way, fortunately here in Texas, we do still have a lot of options to choose from. Some States have only one or two insurance providers. Thank goodness we’re in Texas y’all.
Self-funded health plans vs fully insured
These two types of health insurance plans can have different benefits. Let’s see what each of them offer and which is right for your business.
If you choose to have a fully insured plan, this means that you are outsourcing all liability associated with that health plan to the insurance company of your choosing. There tends to be less flexibility from a plan design standpoint in this space because the insurance providers have them all pre-built as they are updated and approved each year at State and Federal Government levels. Here, you are paying for access to the plans and programs the insurance company has already set up, with their own preferred benefit levels and outsourced contractors, none of which you can deviate from. In the small group space (2-50 employees), it is not uncommon for small businesses to choose a fully insured plan, especially if they have a good amount of claims risk or simply do not want to go down the underwriting path. These options tend to be more expensive than your more traditional plans that require underwriting, but in many instances could very well be the only option a company may have. Oftentimes, these small businesses might be made up of all family members or close knit friends and family, so this is just the path of least resistance for them and that’s all they want to do, especially if the rates although higher than some potential market options they consider affordable.
On the contrary, when you have a level-funded or self-funded plan, you are creating or buying into a program that has been created by another vendor or administrator and you / your company are sharing in at least some of the actual claims costs. Typically the larger the company, the more claims risk they are able to assume. In this type of setup, the sponsoring business (your company) is responsible for paying a certain amount of claims up to a set limit and then secondary insurance would kick in afterwards in the event of large, catastrophic type claim situation. This secondary insurance is often referred to as stop loss or excess loss. Most smaller businesses who go this route will have a very small % of the claims risk they are responsible for, but because they are underwritten, they enjoy a much lower monthly cost for their health insurance than they would have if they were fully insured.
Plans with HSA, FSA and HRA options
Health savings accounts (HSAs) and flexible spending accounts (FSAs) serve as tax-advantaged savings accounts rather than insurance plans, assisting employees in covering health care expenses. These are normally used in conjunction with a health plan which would cover the majority of the expenses.
Both HSAs and FSAs enable employees to set aside pre-tax funds from their paychecks, which can be used to pay for eligible medical, dental and vision costs. You are only allowed to open / contribute to an HSA if you are enrolled on an eligible, high-deductible health plan. One great advantage of an HSA is that any / all funds deposited into this type of account remain in your account and roll over from year to year until they are used. On the other hand, FSAs usually require the funds to be used within the plan year, as they may be forfeited otherwise. Offering both FSA and HSA options in your plans can provide your employees with the utmost flexibility and additional tax savings for your company and your employees.
Additionally, health reimbursement arrangements (HRAs) are health plans funded by employers. Employees can submit out-of-pocket medical expenses like copays, deductibles, and coinsurance to their employer’s HRA for tax-free reimbursement. This is a way for employers to help employees with high deductibles or out of pocket costs if they choose to do so.
When considering employer-sponsored health insurance, our main advice is educate yourself before buying into any single program. Understand all of your options before going down a single path. If you’re not familiar with all of your options, you could be headed down a path that might not make sense for your company. Particularly in small groups, our warning, the easiest paths are often the most expensive. Find a good consultant or broker that you like and trust and lean on them to help get you educated on your available options. Options and vendors willing to provide proposals for your company will vary depending on your company’s size. Also be wary of consultants or sales folks who only represent one insurance company. These are known as captive agents. They will be looking out for their company’s best interests and trying to sell you on their program alone, but will not necessarily be looking out for your company’s best interests or even have the ability to show you what other options may look like. Truly independent brokers and agents will show you various insurance plan options, various vendors and can guide you in finding the best options for you and your employees.
Choosing the Right Benefits Program as a Texas Employer
Here at Holloway Benefit Concepts, we have a team of experts who will evaluate your business needs and guide you towards the best benefit programs for your company. This is all we do, all day everyday.
Our team can help you understand the benefit options that are available to you and help guide you down the path of getting proposals from different vendors in the space and for benefits YOU have decided to pursue.
The benefits landscape is constantly changing, most insurance and benefits providers are making updates to their platforms at least annually, oftentimes more than that. Be sure you are partnered with a team who understands this ever changing market and can best help represent your company and your needs when going out to bid and requesting proposals for your business.
Contact HBC today. Let’s dig in, brainstorm and have some real conversations so we can figure out TOGETHER what the next best move is for your business’ benefits program. We’ll take the reins, and oh, by the way, we help with all the day to day admin too.
Partner with HBC, we’ll handle the benefits for you while you take care of your business.