So, I’ve got a small business in the ecommerce space and I’m hoping to attract a general manager or operations manager to help handle day-to-day operations and handle a few other challenges.
Some of our existing managers and operating partners have suggested that we might have an easier time recruiting if we had better benefits.
Our current process consists of asking employees to cover half of whatever the insurance company will charge.
This has resulted in employee costs ranging from $300 to $1300 or so.
The coverage quality on offer is quite good.
So…
Can someone give me an idea of what an attractive plan looks like in term of employee contributions?
Like… $200 single, $400 single + 1 and $800 for family?
We pay 100% of the premium for our employees. They honestly don’t seem to appreciate it as much as I think they should. I think they’d prefer a higher salary even if it was offset by having to pay for part of their medical coverage.
As a contractor, I pay for my own insurance. Though I’ve been with the same contract house for several years, they pay zero. That said, I’m glad they provide me with the service. It saves me a lot of hassle and I am okay with the plan. I don’t love it (it’s high deductable) but I have verified that it is slightly better than what I would have to pay on the open market for a similar plan.
My company pays around 85% of the premium costs for employees and their dependent families. Market is just around 50% based upon feedback from our consultants, so we are above market.
Most companies in the US have switched to high deductible plans (vs. a copay type plan).
The annual costs to our employees for the employee + 3 dependents is $3,200. Employer share of the costs is approx. $19,000
A good situation is the employer pays 90%+ of the premiums.
For both large and small employers, the average for individual coverage is 82% by the employer. But for family coverage that drops to 71% for large employers and 62% for small employers. But those are averages. So obviously good will be more.
Anyway, roughly $2000 a year in premium subsidies = $1/hr in wages. So if you’re offering 6k a year in subisides that is equal to $3/hr.
When we first went to a high deductible plan, we split the cost of the premiums with employees (as we had always done), but we then set up an HSA for each of them and we (the employer) contributed half of their deductible to it. At the time, about 15 years ago, IIRC the deductible for a single person was something like $2k. While adding $1000, per employee, per year to what insurance costs us is certainly nothing to sneeze at, the $1000 in free money was a nice perk. It’s even nicer for the people that won’t even get halfway to their deductible.
TLDR, split the premium and give them half their deductible back in some form or another.
IF you can afford it, you can also look into an employer repayment plan. I’ve heard multiple variations as to how this works, but it’s something you could check on.
What % of employer premiums are recouped via tax credits? Do employers get 50% tax credits for paying their share of premiums? If so, do they just pay that money in taxes if they don’t cover the premiums, because if so that would affect the calculations.
If OP is going to offer a $6000 a year subsidy for individual plans but gets a tax credit of 3k for doing so, their actual cost is only 3k per employee.
I think you have to qualify this as “for a small business.” I pay $816/year for health insurance and my employer pays the rest. But I work for a university and across the whole system there are more than 2000 employees, so they get a much better deal than a small employer could ever hope to.
That is the case here, and the credits (not deductions) require you to buy from SHOP (which I don’t) and only last for two years (which limits the utility of the thing long-term).