Health Insurance Alternatives For Small Business - 2024 Guide
According to the Bureau of Labor Statistics, benefits account for 1 in 3 dollars spent in total compensation in 2023. With healthcare being a significant portion of that, finding the right health benefits for small businesses is a burden most owners have to face.
On average, it could cost $40,000 on average to cover health insurance for 10 employees annually at a 60% cost-sharing scenario, ($3,960 of the $6,600 total annual premium per employee). And, this does not include the amount the employee has to pay in for premiums, plus copays and out-of-pocket expenses when getting care.
| Per year | % | |
|---|---|---|
| Total Compensation | $ 68,224.00 | 100% |
| Wages and salaries | $ 46,176.00 | 68% |
| Total benefits | $ 22,048.00 | 32% |
| Health & other insurance | $ 7,072.00 | 10% |
| Paid leave | $ 4,576.00 | 7% |
| Supplemental pay | $ 2,080.00 | 3% |
| Retirement and savings | $ 2,704.00 | 4% |
| Legally required benefits | $ 5,408.00 | 8% |
Am I required to provide health benefits?
If you have 50 or more employees, yes. If you have less than 50 employees, it is optional.
As of 2023, companies with 50 or more employees are subject to the Affordable Care Act (ACA)'s employer mandate, which requires them to offer affordable group health insurance that includes essential benefits to their full-time employees. If a large business does not offer coverage, it may be subject to a penalty. The ACA sets minimum limits on cost sharing for large employers, including:
- A deductible of no more than $7,950 for individual coverage and $15,800 for family coverage in 2023.
- Coinsurance of no more than 20% for in-network services.
- A maximum out-of-pocket limit of $8,700 for individual coverage and $17,400 for family coverage in 2023.
What Are Alternatives to Traditional Health Insurance For Small Business
Instead of traditional health insurance plans, small businesses can choose alternatives such as self-funded insurance, health reimbursement arrangements (HRAs), group health insurance captives, or by using Mira to reduce costs while ensuring adequate healthcare coverage for employees.
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Khang T. Vuong received his Master of Healthcare Administration from the Milken Institute School of Public Health at the George Washington University. He was named Forbes Healthcare 2021 30 under 30. Vuong spoke at Stanford Medicine X, HIMSS conference, and served as a Fellow at the Bon Secours Health System.