Employer health insurance is no small line item for any business, especially startups. For companies that do offer healthcare, there are lesser-known benefits of healthcare plans that can save employers money.
Helping startups and entrepreneurs set up healthcare plans is Karen Ator’s expertise. She’s the vice president of operations at Vista360health, an Austin-based health care provider. Vista Health Plan, Inc. started in 1994 but launched its HMO plan, Vista360health for small businesses and individuals, in 2016.
Ator highlighted five benefits of healthcare plans that many startups overlook.
Get treated faster with telemedicine
Through an app, text, phone or video call, employees can talk with a doctor from the convenience of their own desks. This minimizes the time employees might otherwise spend in a waiting room instead of their workspaces. Plus, emergency room visits are expensive for everyone involved — even from an employee downtime standpoint. Most users get a response within minutes from a medical professional who can point them in the right direction.
Depending on the plan, telemedicine can be free or cost a small copay. It “really does cut down on time off from work,” Ator said. Expediting prescriptions and streamlining advice keeps employees out of expensive emergency rooms.
Take advantage of tax benefits
Employers can write off most health care plans as a business cost, especially when signing up for group care. The most common option is a Section 125 (“cafeteria”) plan, which lets employees deduct any of their premium costs before taxes are applied. Employees like that, Ator said, because they can lower their taxable income. In any case, Ator advises startups use a tax professional as there’s only so much companies can write off.
Use insurance as a recruiting tool
Health care is the most desirable employee benefit, according to a 2016 study by Fractl. That makes it a powerful recruiting tool for employers to attract talented candidates. “When you have recruitment challenges and want benefits to help overcome them, first look at who you want to recruit,” Ator said.
The needs of a 25-year-old, a 35-year-old with a family and a 50-year-old will all be different. These factors can help employers choose which plans to offer. It’s most effective to offer an HMO with good in-network providers if you’re hiring within a region. They’re usually received well by employees, too, because often they won’t need to switch local providers.
Present a variety of plans
One plan does not fit all. Smaller companies may struggle with choosing a plan that fits its employees, especially in the early days of building the business. Startups can consider offering a base plan and a buy-up plan. Base plans typically have lower premiums and have higher out-of-pocket expenses, and more often, these lost cost plans are paid by the employer.
But if employees want a lower deductible plan or added benefits they can pay for the buy-up option via payroll deductions. “If the employee wants to buy up to it, they can pay the difference”, she said. This arrangement cuts costs for the employer while satisfying employee coverage.
Offer a plan in lieu of higher compensation
How important are benefits versus compensation? Startups competing for talent might pay the full cost of an employee’s healthcare. But some employees (say, those without families) might consider or prefer higher pay without benefits. It can be tough for startups to pay for employee plans unless they have robust funding. Ator recommends startups consider two tiers of plans: one the employer pays, and one with an optional cost-share to attract employees who prefer higher pay. And don’t forget using PTO as a negotiating tool.
Ready to choose a plan? Vista360health has been committed to the health of Central Texans for almost 25 years, helping small businesses find the best solutions for themselves and their employees.