A lot of business owners are taking a cautious approach to the new health-care reform and making sure they spend wisely. Only around 30 percent are optimistic about the outlook in the economy for 2014. More than 60 percent stated that they are choosing to spend wisely and invest instead of move forward since they do not think the outlook is looking good for the new year.
Controlling Health Care Costs
The costs for health care seem to be at an all-time high this year. For an employer to cover a family, it would cost more than $16,000 and close to $6,000 for one person alone. Some small businesses and employees can’t afford the coverage that’s out there, and a lot of businesses want to make sure that they offer coverage to their employees in order to retain and recruit them for their companies.
The Secret Weapon
One of the biggest plans that companies are using is the defined-contribution health plan. Companies can offer health benefits and save on the costs associated with them. Your employees get a set amount every month to spend on medical costs and policies. When it comes to the individual market, the costs are much lower than for a whole business. Employees might also be able to take advantage of these benefits, as well.
The Structure
Your company can reimburse employees for premiums that they have to pay for their own individual health-insurance plan instead of offering a health-insurance policy as a group. You can set any amount of money to spend on this type of insurance for all of your employees, give tax-free allowances to spend on health care and reimburse employees for these expenses through payroll. Usually, Section 105 is used for this type of health-insurance plan.
If you’re a business that does not offer health-insurance plans but wants to, than using this approach not only gives your employees more freedom and the option to choose on their own, but it also saves your company money. Everyone can pick a plan that is right for them instead of relying on a group plan that might not cover everything that the employee needs to have covered. You do not have to raise the amount since the price will stay the same, and employees can choose the amount in their chosen plan. If they go over the amount, they will have to pay for it out of pocket. It can be the smart solution for numerous businesses.
