With worker shortages in many sectors across Canada, small businesses are increasingly providing health benefits to recruit and retain top employees.
However, health insurance coverage can be expensive so it’s important to research the options. Many employers are turning to Health Spending Accounts as an alternative to buying costly insurance.
In this post, we will consider the choices in small business benefit packages to keep staff happy and at the same time manage expenses.
Small business benefits packages
Many employers contact big insurance companies like Sun Life and Blue Cross to get quotes on small business benefits packages. In fact, this field is so complex that there are contract HR experts for hire to find the right mix for your company.
Health insurance for small business costs vary depending on each person’s age, gender and health history. For example, a 40-year-old couple with no children will pay about $219 per month with Sunlife. This provides reimbursement for prescription drugs, vision care and dental.
Premiums will also be impacted by the amount of coverage your insurance provides. Most insurance companies offer three or more packages, each with greater benefits – and also higher premiums.
For example, insurers may require that you pay a deductible when filling a drug prescription. In addition, there may be a restriction on how many times you can see a paramedical specialist, such as a psychologist or massage therapist.
Dental care may be limited to $750 or $1,000 per year. If you have visited the dentist recently, you will know that is enough to cover checkups and basic cleanings; you will be paying out of pocket for complex restorations such as bridges or implants.
The Health Spending Account alternative
An HSA is an alternative to purchasing benefits from a large insurance company. It allows employees to get reimbursement for a wide range of healthcare expenditures. There is no monthly premium to purchase and the administration is simple. It can be a great health insurance option for small business owners.
Here’s how it works with a corporation where you and your spouse are the sole employees: You simply set up an account with an HSA benefits provider. As you utilize healthcare services, you submit the receipts for reimbursement. Your company funds the expense and you personally receive the payment.
If you have employees, the process is slightly different. You set an annual maximum in each employee’s HSA – for example, $1,000. It can be different for each group of employees; you could provide managers with $1,500 in coverage. You pay a monthly amount in trust to the benefits company to fund any employee claims. When an employee makes a claim, the benefits company sends the payment.
In both cases, the reimbursement is tax-free for the employee and tax deductible for the corporation. The HSA administrator typically charges a small fee, usually about 8-10 percent.
A key advantage of an HSA is that it’s simple for the corporation to administer. There’s no need to research various insurance companies to find the best price and coverage.
For employees, a major boon is the wide range of medical expenses that can be claimed. Yes, there’s the usual prescription drugs, dental treatments and eyeglasses. However, you can also be reimbursed for specialized needs such as assistive devices for the shower, orthopedic shoes and even service animals.
This flexibility provides an advantage in recruitment and retention. Hemalee Sisodraker of the furniture company Endy told Benefits Canada magazine that “our strategy behind our total offerings is flexibility.”
“It’s really important to us to offer flexibility in all areas, including vacation or wellness days. Not every employee is the same and we want to really ensure that we have a high performing team that wants to be here and views the company as a great place to work,” she said.
Why provide benefits as an employer?
Small businesses are competing with large corporations for top talent. Since most big companies offer benefit packages, it’s vital to keep up in attracting and retaining workers. That’s why it’s important to consider the health insurance options for small business owners.
Many employees state that a good benefits plan plays a key role in convincing them to stay with a firm. When you are able to keep a worker, you save the cost of hiring and training their replacement. These costs can add up quickly, especially if you have a high employee turnover rate.
Firms can expect higher worker productivity if employees are healthy and well. There will be fewer days lost due to illness and mental health breaks. In addition, small business benefit packages encourage employees to engage in preventive healthcare. For example, a regular visit to the dentist can help deal with dental concerns at an early stage, before they develop into a serious problem that will require the employee to take several days off from work for dental surgery.
Health insurance or Health Spending Account?
In this article, we’ve discussed the advantages of providing your employees with a small business benefits package (or for just you and your spouse if you don’t have any staff). If you decide to move forward, it may be simpler to set up a Health Spending Account rather than purchase health insurance for small business from a big insurance company. An HSA saves you a lot of work in researching the best options for your company. And your employees won’t be grumbling that you chose one package over another. An HSA gives maximum flexibility to staff to decide how they want to spend their healthcare dollars.
