Lisa called our office recently as she was looking into securing health insurance through a business health insurance plan. She was frustrated by the medical expenses that came with her individual health insurance plan through the ACA exchange.
Lisa runs a growing landscaping business in Lubbock, and her crews work hard every day. She knew that if she was frustrated with medical costs, her employees have to be as well. She wants to take care of them. But the annual premiums she sees make her nervous.
Before calling us, she looked at a quote from a big insurance provider. It showed average premiums that seemed high, but she thinks maybe she can swing it. Make no mistake, it was a swallow hard and trust moment thinking about what it will cost.
Then one of her fellow business owners tells her that the raw health insurance costs isn't the only thing to worry about. Lisa wants to do the right thing for her team, but she also needs to understand what she’s actually signing up for. So she digs in to get a better picture of what group health insurance really costs.
Monthly Premiums Are Just the Beginning
The first number that shows up in every health insurance coverage proposal is the monthly premium. It’s the number most busy business owners see and either move forward or walk away from. Lisa was no different and thought this number was the full cost.
But then she remembered something. She had chosen her health insurance marketplace plan based solely monthly health insurance premium which gave her outrageously high out of pocket costs. She began to realize that some health plans she was looking at had lower premiums but seemed to come with more limitations. Others had higher monthly costs, but offered more comprehensive coverage.
She soon realized that the premium is just the price to keep the health plan active. It has nothing to do with how good the coverage is or what she and her team will pay in out of pocket expenses when they actually need care.
The next thing that our insurance agent told Lisa is that she didn't have to cover the whole thing. The next thing they looked at was how much of that premium she’d be expected to pay each month.
Employer Contributions Matter More Than You Think
In a traditional group health insurance plan, employers typically cover a portion of the eligible employee’s premium. In most cases, the floor is 50% of the health insurance costs. Some business owners pay beyond that, even up to 100% for employees. Nothing was required for those employee premiums for dependents. Lisa had to decide what made sense for her budget and for her team.
She thought about the kind of crew she had. Most of them were young, with a few raising families. She considered what they were likely paying for their individual plans if they were carrying family coverage at all.
If she only covered the employee portion, some of her team might not be able to afford to add their spouse or kids. That might create resentment or worse, turnover. Lisa began to see how her contribution amount directly impacted both recruiting and retention.
So she asked the next question logical question given her frustration with current medical costs. What happens when her team actually uses the insurance?
Out-of-Pocket Costs and Deductibles Add Up
Lisa looked at the different plan designs and saw terms like “deductible,” “coinsurance,” and “out-of-pocket max.” Each of these affects what employees pay when they go to in network providers, fill a prescription, or visit the ER.
She saw a plan with a lower monthly premium, but a five-thousand-dollar annual deductible. That’s money most of her team doesn’t have ready in a savings account. On the other hand, the plan with the higher premium had a more reasonable deductible and better affordable coverage for regular care.
Lisa started thinking about which plan would actually help her crew, not just look good on paper. She wanted a plan they could actually use, not one they’d avoid because of health care costs.
Don’t Forget the Tax Benefits
One thing Lisa hadn’t really considered was the tax impact on her business. Her CPA reminded her that health insurance premiums she pays generate premium tax credits for the business.
On top of that, when employees contribute to premiums through payroll, they can do so with pre-tax dollars, which lowers their taxable income. That also reduces the amount she pays in payroll taxes.
It wasn’t enough to cancel out the full cost, but it helped defray her average cost per employee. And it made her feel better about putting money toward an employee benefit her team truly needed.
Work With a Texas-Based Health Insurance Specialist
At this point, Lisa was feeling better but still overwhelmed. She had a better idea of the real cost of health insurance. But she also didn’t want to get stuck with a plan that didn’t fit. Fortunately, the agent at Insurance For Texans was able to help her decipher her coverage options.
Together, they walked her through the full breakdown of affordable health insurance options available to her company. They helped her compare the additional costs to her company, and the healthcare costs beyond just premiums. This showed her how to match the right plan to the needs of her team.
When they looked at alternate options she hadn’t considered, her mind was blown. Being able to look at true solutions for business health insurance plans is the difference between an experienced health insurance broker and someone trying to make a quick buck off you.
If you’re like Lisa and want to offer health insurance without flying blind, Insurance For Texans can help you do it the smart way. By looking at the total annual costs and healthcare benefits. You’ll get clear answers, real numbers, and support from people who know how to help small businesses across Texas do this right.
Click the button below to start the process with Insurance For Texans and secure your business health plan.