Business Health Insurance: The increasing costs of healthcare are not just a concern for individuals, they have also majorly impacted businesses that prioritize health benefits for its workforce.Talking about small businesses, they have been specifically vulnerable. For the last 15 years, the total cost for covering one employee under group health insurance has increased by around 200 percent, which is from $2,196 to $6,435.
All these unsustainable expenses, along with the difficulty as well as the one-size-fits-all nature of traditional group advantages, particularly have caused various small businesses out there to cut down their health benefits.
Most of you may already know that this is a losing strategy for the year 2020. And if we talk about the future, it has been predicted that small businesses will encounter a competitive war for talent in which health benefits are important if all these businesses are going to succeed.
Fortunately, we have a number of small business health benefits options in the present time more than ever.
In this blog, we have discussed three of the most well-known benefits for small groups in the year 2020:
- Individual Coverage HRA (ICHRA)
- Qualified small employer HRA (QSEHRA)
- Group coverage HRAs
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If you decide to stick till the end of this blog, you will certainly get a clear understanding of how these health insurance options work, what all benefits they mainly provide, and what options are the best amongst all. In addition to this, you can also learn about some regulatory changes that may make new health benefit options available in the near future.
Take a look!!
Top 3 Business Health Insurance Options
Individual Coverage HRA (ICHRA)
At the starting of this year, two new HRAs were made available to every business owner, namely the individual coverage HRA (ICHRA) and the expected benefit HRA.
The Individual Coverage HRA is a great option for employers of all sizes, especially because they have no restrictions depending on employee headcount such as the QSEHRA.
The ICHRA functions the same as the QSEHRA. However, it does not have any type of contribution limits.
Most importantly, businesses can even provide different allowance amounts depending on 11 employee classes.
In addition to this, the ICHRA is available for employees enrolled in individual health insurance. That means people who are already enrolled in his or her spouse’s group health insurance policy cannot be a part of this option.
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The Qualified Small Employer HRA (QSEHRA)
This is yet another popular option. The qualified small employer health reimbursement arrangement (QSEHRA) was designed through bipartisan legislation in the year 2016.
With the QSEHRA, mostly like any other health reimbursement arrangement (HRA), every business with fewer than 50 employees can provide its employees with a monthly allowance of tax-free money.
Employees can enroll in an individual health insurance policy, as well as the business will reimburse them up to their allowance amount.
Besides, an employee can also use the QSEHRA to acquire reimbursements for eligible out-of-pocket expenses. Plus, it allows businesses to have control over their budget while providing a meaningful advantage to their employees.
With the QSEHRA, every reimbursement is free of any payroll tax for the business as well as its workforce.
Reimbursements are usually free of income tax for an employee if he or she is covered by a policy offering minimum essential coverage (MEC).
Frankly speaking, the QSEHRA is considered one of the exceptional choices for a small business as it provides a complete personalization. An employee can even buy what fits best for his or her needs. On the other hand, small businesses are also free to build their own budget.
In addition to this, the QSEHRA also provides value to a small business in unique cases, particularly those with employees who work in numerous states, those with employees who are covered under a spouse’s group policy, and also those with employees with no insurance.
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- Group Coverage HRAs
This option is known for its lower cost and high deductible health plans (HDHPs). But there is a reason why it is less expensive: it covers less than other policies on this list.
To reduce some of that loss, a small business can provide a group coverage health reimbursement arrangement.
With a group coverage HRA, a business can offer employees a monthly allowance of tax-free money along with the group policy. Employees can choose and pay for health care as well as business reimburses them up to their allowance amount.
The aforementioned are the top 3 health insurance options in 2020. So, what are you choosing for your employees?