How small businesses can navigate health plans this open enrollment
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Small businesses are always looking for ways to keep and retain talent. Job seekers want secure and reliable benefits — which include health care. While affordability for businesses may seem like a problem, there are ways to offer what prospective employees need.
Offering a traditional group healthcare plan can be a costly expense for some small businesses. It can be hard to keep up with the contributions needed as costs for plans are only going to grow in the years to come. But there are other options available for a plan that can be more affordable for the business and provide employees greater flexibility.
For over 20 years, health reimbursement arrangements, or HRAs, have allowed employees to be reimbursed for qualifying medical expenses through their employer. In 2020, the government updated the program to ensure that insurance premiums were also covered, through a plan called an individual coverage health reimbursement arrangement, or ICHRA. So employees that want to choose a market health plan can use the ICHRA to reimburse health insurance costs.
Small business owners have a lot of responsibilities to juggle, so deciding on the best health plan to offer can be a daunting task. Here are a few questions to ask to decide if implementing an ICHRA is right for you.
Do you have a strict budget?
Offering an ICHRA can be a helpful way to stay within your budget when offering plans for employees. Employers decide how much they want to contribute, with no minimum or maximum limits. And in Indiana, a new tax credit is being introduced in 2024 that may motivate businesses to adopt the model.
The Indiana General Assembly passed House Bill 1004 earlier this year, which offers a tax credit to small businesses under 50 employees that offer any form of HRA. Employers may receive up to $400 per employee on the plan in 2024, and $200 per employee in 2025. This was implemented to ease financial burden and encourage businesses to look into different options for employee health coverage.
Do you have part time or seasonal employees?
While it’s required by law to offer a health plan to all full time employees, the same doesn’t apply for part-time employees. But if you’re looking to keep good retention rates and employee morale, it’s in your best interest to offer options to all employees. And an ICHRA can be an affordable way to ensure everyone is covered. Businesses don’t have to choose between a traditional group health plan and an ICHRA. Instead, business owners can offer a combination of plans, like traditional health plans for full time employees and ICHRA to part-time or seasonal employees.
Do my employees currently qualify for premium tax credits?
Some employees who are using Marketplace coverage may already qualify for an Advanced Premium Tax Credit, or APTC. This is determined based on household income. So depending on how much is offered through an ICHRA, it could impact their APTC. To ensure that employees can get the coverage they need while still being affordable, small businesses owners should be aware of their employees’ financial situations before making a decision to switch.
Ultimately, the goal for your small business health plan should focus on one thing: ensuring each employee and their families can live a healthy lifestyle. Whether working with a group health plan or adopting an ICHRA, there are many ways that small businesses can find the right fit for their employees. Offering the flexibility to choose a plan will go a long way in showing your team that you care, and it won’t go unnoticed.