For small business owners, navigating the world of employee benefits insurance for the first time can be a daunting task. After all, it’s not usually the first thing you’d think of when starting a business, and insurance is often seen as a confusing and complicated topic.
At Benecaid, we hope to give our customers as many resources as possible to ensure that with the help of an advisor, you are equipped to make informed decisions that are right for your business. That’s why we compiled the answers to the most commonly asked questions we receive from small businesses.
1. How many employees do I need in order to provide benefits?
Most group insurance programs, including Benecaid, require a minimum of 3 unrelated employees. This means that a business comprised of 3 employees including a husband/wife duo, for example, would typically not be eligible.
Do keep in mind that small businesses often grow in size. And while you may have a relatively small number of employees now, you will likely look to expand your team in the future. When evaluating a plan, it’s important to work with a Benefits Advisor to find an adaptable plan that not only provides the coverage you want for your present employees today, but will also fulfill future needs when the time comes.
2. How much should I spend on employee benefits?
When businesses are just starting out, margins are often narrow and it’s natural for business owners to be particularly concerned about the cost of any employee benefits that they may purchase. Every business is unique; its needs and the needs of its employees will likely not be the same as others’, and should be treated on an individual basis. There’s really no “rule of thumb” for how much businesses should spend on employee benefits. Your Advisor will work with you to find a plan that aligns with your business needs and your budget, whatever that may be.
A solid benefits package is integral for competitive employee hiring and retention, though it’s important to balance that with how much the business can actually afford. The last thing you want is to overestimate how much you can afford and have to downgrade the following year, leading to disgruntled employees.
Another thing to consider when deciding how much coverage you’d like to offer employees is your general employee demographic, specifically age, and whether they have families. If you have a relatively young employee base, you’re likely to see less spending in drug and disability, and more in paramedical claims. If a number of your employees are middle-aged or older, you may experience higher spending in claims for drug and disability.
3. What are some cost-control measures I can put in place for my employee benefits?
There are a number of ways to ensure that your benefits remain within your price range and that no nasty surprises come up:
- Premium sharing – Employers can share the cost of premiums with employees, and may a minimum of 50% of employees’ monthly premiums.
- Co-insurance – consider how much you’d like to cover for claims; typically, employers pay between 100% down to 80% for claims submitted (with the employee paying the remaining 20%).
- Removing provisions – Sometimes, businesses looking to cut down on insurance expenses may consider removing certain provisions, such as vision and/or paramedical coverage. However, whether these provisions would be a good idea to include depends solely on your employee demographics. Do none or very few of your employees wear glasses/contact lenses? Then you may be able to get away with removing vision care. Do more than half of your employees require glasses? Then perhaps you may consider including vision coverage.
- Reduction of maximums – you may set a cap on the maximum that an employee can claim from his/her insurance.
Interested in learning more? Read our article on Affordable Health Care Coverage for Small Businesses .
4. What kind of benefits might I consider?
Your employees have differing needs and incur different kinds of expenses depending on age, health, what kinds of dependants they have (if any), and other factors. Traditional benefits often provides benefits which goes unused by most employees, while employees wish they had more coverage in areas they do use.
Did you know? 80% of employees would value benefits customized to individual circumstances and age [Source: MetLife]
Groups that come to us with existing benefits often wish to maintain a semblance of their existing benefits for consistency. For small businesses that have never had employee insurance, A Health Spending Account (HSA) can provide great value and is an alternative to potentially pricey traditional benefits plans which provide support that is oftentimes irrelevant individual employees.
How HSAs work:
Instead of having separate categories for areas of coverage such as medical/drug, dental, and paramedical, HSAs roll all of these categories into one lump sum account. This way, your employees are covered for the things they need most – whatever that may be. An HSA can also be used to supplement an existing insurance plan. Learn more here.
For those that are more comfortable with traditional benefits, here is a look at some common options:
- Medical coverage – This is one of the most important components of a benefits plan. Includes drug coverage, travel insurance, and medical supplies and equipment.
- Dental coverage – dental coverage is a part of the plan people will expect to use with the most certainty. We recommend that all businesses looking to provide benefits include dental coverage in their plan.
- Paramedical – this includes things like massage therapy, physiotherapy, acupuncture, chiropody, etc. At many companies that we work with, paramedicals are the most used part of benefits plans.
5. Do all my full-time employees need to be added to the plan?
If a business has an employee benefits coverage, all full-time employees must be covered. However, you are able to grant different levels of employee benefits based on salary, seniority, whether they are in a management position, etc. Your Benefits Advisor will be able to work with you to determine what levels of coverage would suit your business and its employees.
Have More Questions?
What can be covered in a single article is limited, but our Consultants have a wealth of knowledge surrounding employee benefits and are experienced at working with small businesses to find employee benefits options that are perfect for you.
Contact a Benecaid Consultant today at 416-626-8786 or email us at email@example.com to learn more.