Employee health insurance and the small practice owner
From reimbursing premiums to group policies to self-funding, companies have several choices.
2020 is just around the corner, and with the new year come changes to health insurance standards and employee expectations. As insurance spending continues to increase year over year, small veterinary practices often struggle to compete with larger practices for top talent.
Below is a summary of the top three health care options that a small veterinary practice can use to attract and retain nurses, technicians and other staff.
1. Health Reimbursement Arrangements (HRAs)
Under this option, the employer does not pay insurance premiums directly. Instead, an employee’s premiums and other IRS-approved expenses are reimbursed. The primary benefit of using an HRA is tax savings. Neither the employer nor the employee has to pay payroll or income taxes on the reimbursement sums.
Here are the three most popular HRAs that cater to specific business structures and insurance types:
- Qualified Small Employer HRA (QSEHRA): This arrangement is designed for businesses that do not offer group health insurance and employ fewer than 50 people. Under a QSEHRA, employers must not exceed specific annual reimbursement limits. The limits for 2020 are: self-only employees, $5,250 a year ($437.50 a month) and employees with family: $10,600 a year ($883.83 a month).
- Individual Coverage HRA (ICHRA): While similar to a QSEHRA, an ICHRA does not have reimbursement limits and is generally available to any size business that does not offer group health insurance. The ICHRA is best suited for employers that want to reimburse only insurance premiums rather than all eligible health expenses. In addition, employers have added control over reimbursement amounts based on 11 employee classes.
- Group HRA: This arrangement is designed for businesses that offer group health insurance but want to reimburse employee expenses tax-free.
2. Traditional Group Health Insurance
Under this setup, businesses work with an insurance broker to choose a single insurance package for all eligible employees — typically people who work full time.
Traditional group health insurance is best geared toward larger businesses but is not exclusive to them. Because group insurance is a single plan for all, many employees’ health needs are not met, proving the need for an individualized insurance solution.
3. Self-Funded Health Insurance
Small veterinary practices can self-fund an employee insurance plan. These plans give companies the freedom to construct an insurance policy without the need for an insurance company or broker. This option is less than optimal for a small veterinary practice with few employees because of numerous compliance and administration issues.
The risk to a small company that self-funds is particularly high. Learning that an employee needs a major medical procedure can be a big blow to a small practice. And like a group health insurance policy, self-funded insurance does not cater to each employee’s individual health needs.
In conclusion, small veterinary practices have more choices than ever when it comes to selecting an affordable and competitive insurance option. While insurance rates continue to rise, small practices have greater freedom when choosing between a reimbursement arrangement and a traditional group policy.
Alex Flitton is content marketing manager at PeopleKeep, a creator of HRA benefits automation software for small businesses. Learn more at www.peoplekeep.com.