If you are a business owner or HR manager shopping for employee benefits for the first time, one question may come up first: How much does this cost?
It’s a fair question. Employee health insurance is a recurring business expense, and you want to offer a benefits package that will help you attract and retain employees without stretching your budget too much. The good news is that you don’t have to figure it out yourself, nor do you have to pay the same amount to each employee. Your business size, workforce, contribution strategy and employee qualifications all impact your total costs.
4 Budget Options for First-Time Benefits Buyers
Here are four common scenarios to consider when you’re first budgeting for employee benefits.
1. You’re a lean startup with tight cash flow
If you’re running a business, every recurring expense matters. This doesn’t necessarily mean you have to wait for health insurance to be offered. one fixed contribution model Gives you more control over how much you spend on employee health benefits.
With CaliforniaChoice, you decide how much you want to contribute toward employee health insurance premiums. Depending on your strategy, you can contribute to a specific plan, tier or benefit level, all eligible plans, or the lowest-cost eligible plan. This gives you a way to create a benefits budget that works for your business.
Employees then apply your contributions toward the coverage they choose. If the plan they choose costs more than your contribution, they will pay the difference. As a result, you can offer your employees meaningful health insurance options without paying the full premium for each plan. And your contribution strategy isn’t locked in forever. When you renew, you can revisit your contributions and adjust them to your business and employee needs.
2. You’re growing and competing for talent
If your business is performing well, you’re probably hiring and ready to expand your team. You may find that there are options for qualified candidates and that many of your competitors offer health insurance.
If a candidate rejects your offer because you don’t offer benefits, or an employee leaves the company to offer benefits, then no Offering health insurance can also add value. This is where it helps to think of employee benefits as more than just an expense.
Health insurance can be an important part of your overall compensation package and help you attract and retain the employees you need to grow your business. The better news is that you can determine how much you’re willing to invest.
With CaliforniaChoice, you can determine fixed contributions for employee premiums. You can choose to contribute more to make your benefit plan more competitive, or to build a contribution that fits your current budget. For smaller employees, this can make the cost of providing benefits more manageable while keeping employees covered.
3. You are a sole proprietor and need to pay for your own health insurance
If you are a sole proprietor, you may already have individual health insurance for yourself or your family. If you’re hiring now, it’s worth comparing your current situation to the cost and structure of a small business group health plan.
Depending on your specific situation, moving to an employer-sponsored group plan may give you and your employees different coverage options and contribution strategies. It may also change the way you handle your own health insurance costs. The key is to compare your options and not assume that individual insurance is automatically the best fit.
A broker can help you look at the numbers and explain how a group health plan can work for your business.
4. You have full- and part-time employees
If you own a restaurant, retail store, or other business with full- and part-time employees, don’t think you have to provide benefits to everyone. Employee eligibility may be based on factors such as hours worked, health plan and requirements of applicable law. This means the structure of your workforce can have a significant impact on your overall benefits budget.
Before making a budget, take a closer look at:
- how many employees do you have
- How many people work full-time and how many work part-time?
- Which employees may be eligible for coverage
- How much premium do you want to pay?
- What types of insurance do you want to offer?
- What your employees may value most
Knowing these details up front can help you create a more realistic budget and avoid surprises.
How to Budget for Group Health Insurance Beyond Premiums
When you’re first shopping for employee benefits, it’s easy to focus on one number: the monthly premium. But there’s more to consider.
Consider how much you want to contribute, what coverage options you will offer, and how your strategy might change as your business grows. This is one reason why the defined contribution model is useful for small businesses. You determine how much you’re willing to contribute, and employees have more flexibility to choose from the coverage options you offer.
With CaliforniaChoice, employees can choose from a variety of health plans and insurance options, depending on what you decide to offer your team. Your benefits budget doesn’t have to identify one-size-fits-all solutions for your employees.
How a Broker Can Help You Create a Benefits Budget
Shopping for employee benefits for the first time can feel complicated, but you don’t have to deal with it alone. A benefits broker can help you:
- Compare health plan options
- Understand employee qualifications
- Estimate your total costs
- Develop a contribution strategy
- Learn about available coverage options
- Find ways to balance staff needs with budget
This is something many first time home buyers don’t realize, Working with a broker usually costs you nothing extra. Your agent can provide guidance when shopping for insurance and help you understand your options. If you don’t have an agent yet, you can find one here.
Ready to start creating your benefits budget?
There is no uniform figure for how much each small business spends on employee benefits. The right budget depends on your business, your workforce, and what you want to achieve with your benefits program.
It’s important to start with what you can afford, understand your options, and develop a strategy that can grow with your business. Employee health insurance doesn’t have to be all or nothing. With the right approach, you can provide valuable coverage to your employees while maintaining control of business costs.
When to start providing employee health insurance
Still wondering if your business is ready to offer health insurance? read 5 signs your small business is ready to offer health insurance Here are five signs that it might be time to increase employee health benefits.
