Planning Health Insurance Benefits

One of the biggest benefits employees look for in a job is health care insurance. Employers on the other hand see health insurance as once of the biggest expenses. However, by understanding the the value of insurance for your employees, most employers can come up with a plan that offers great benefit to the employees without letting the cost get out of hand.

High Deductibility Health Insurance

The more an insurance company expects to pay, the more they charge you. So if you look for a plan that pays for every single health related expense, the premiums will be quite high. On the other hand, the less the insurance company expects to pay the lower the premium. By choosing a plan with a high deductible, you can offer insurance with a low cost per month.

At first look, this seems like it isn’t giving your employees much of a benefit. If you chose a plan with a $5,000 deductible, they could be liable for $5,000 per year in medical expenses. For a younger person, it is likely that all their health expenses will be below the deductible amount, so the insurance will pay nothing. However, most people overlook the price negotiation that insurance companies do.

Health Insurance Contract Pricing

Most insurance companies have negotiated rates with health care providers. In other words they go to each hospital and doctor and say, “We’ll send our people to you if you are willing to accept our standard payment rates”. So instead of charging $300 for an office visit, the insurance company may say that they will pay $60.

If your insurance is structured correctly your employees will get the lower negotiated rate even if they never meet their deductible. That means if they would normally have had $5,000 in medical care for the year, the negotiated rate could easily be only $1,000.

This way, the insurance is helping save them money, even if insurance doesn’t end up paying for anything.

Getting the Insurance Company’s Pricing

To help make sure your employees get the insurance company negotiated rate for health care, you need to try to find an insurance company that handles the billing–even for items that are below the deductible. Some companies basically just say, “pay for everything yourself and start sending us the bills once you go over the deductible.” Unless they have changed, this is how Humana works. The problem with this is that the doctor and hospital are charging you directly, so they are going to charge you the higher rate.

Employer Self Insurance

Sometimes it makes sense for an employer to “self insure”. This means that they employer will pay for medical expenses directly or reimburse their employees for medical expenses. When large companies do this, they still will take out an insurance policy to cover expense that go over a large amount–say one million dollars. Smaller companies will often self insure for dental benefits because the expenses tend to be much lower.

For a small company the best mix for self insurance is to get a health insurance with a high deductible. For example, say that each employee is given an insurance policy with a $10,000 deductible. This insurance will probably cost the employer very little because the deductible is so high. The company then reimburses each employee for the first $10,000 of medical care. Optionally the company can establish their own deductible. For example, the company can offer to pay for all expenses after the employee pays for the first $2,500. Since insurance kicks in at $10,000 the company would only be liable for $7,500 of health expenses per employee.

In setting up a system like this, it is important for the employer to make it very clear what is covered and what is not. Usually following the same standards as your insurance company is the easiest. Also make sure that employees are billing their medical care first to the insurance company so you are only paying the insurance company contracted rates as discussed above.

Health Savings Accounts

Another benefit of high deductible insurance policies are the health savings accounts. These are special savings accounts that employees and employers can contribute to with pretax dollars. The accounts can be used for health related expenses. Unlike some of the older types of health savings accounts, the money stays with the employee until they spend it. It doesn’t zero out at the end of the year and it stays with the employee even if they change employers.

By offering your employees insurance with a high deductible along with a health savings plan where you make contributions, you can let them see the benefits you are providing. If they see an account where you are putting an extra $100 per month for them to use for health care, it is much more noticeable than spending an extra $100 per month on insurance to try to lower the deductible.

Health savings plans appear to be more liberal in what they will pay for than most insurance companies, so they will often give your employee the ability to pay for items that wouldn’t be covered by insurance anyway. Also if an employee doesn’t use all the money in their savings account it will accumulate and they can eventually use it for other things when they retire.

In Summary

In summary, health insurance can be one of the most daunting and expensive part of dealing with employees for a modern small company. By doing careful research and understanding the system, employers can offer their employees more value while spending less money. When looking at changing or implementing insurance you should consider the age and health of your average employee to find a plan that will give the greatest benefit to the most people possible.

Make Your Business Look Professional

Business Cards

Business cards don’t need to be fancy or expensive, but you need to have them to help present you and your business. You can get business cards online for free with an add on the back, but it is recommended that you get your own cards without other advertising. These will usually cost $15 to $20 for a basic card. You can spend more and get a photo, cool design or even metal business card. If you want to go beyond the basic card, adding your company logo is probably the best bet.

Be sure to keep business cards with you. Keeping a small stash in your computer bag, glove compartment, and travel bags is a good idea to help make sure you don’t find yourself without a card. Hand out the cards when you introduce yourself. If someone forgets your name, they have your card to reference.

Website

Websites are becoming modern day business cards. You need to have a website at your own url that matches your email. This doesn’t need to be fancy or complicated. It needs to give people enough information about your company that they will know who you are and what you do.

If you want to use your website to start drawing in customers you need something a big more complicated. Have a site with a blog is a good first step. The blog gives you a way to easily add content on a regular basis. If you use it to provide value to your current and potential customers it can help keep your brand in peoples minds when they need services you provide.

If your product is something that can be sold over the web, an online store may be a good choice. You can try to host your own store, but often it is best to use a store service from a company that specializes in online stores. Yahoo has a good store platform like this available for a low monthly fee.

Email

Email is one of the most important forms of communication in todays world. Make sure your email portrays the image you want people to have of your business. I’ve seen many people ruin their business professionalism by using a hotmail.com address, or sending email in a very unprofessional manner. Here are some tips for making email help your professional business image:

  • Use your own domain — Real businesses have email from their own domain. You should be able to send and receive mail from username@yourcompany.com. This is less expensive to setup than it might seem. You can go through your isp to set this up or contact Xeric Corporation for information about their business class email plans.
  • Use a business like signature — The signature is what shows up at the end of each of your emails. A short signature with your name, title, company name, telephone number and email address will help convey a professional image.
  • Don’t use stationary — Some email software tries to help dress up your email with background images. You want your messages to look crisp and business like. Since you don’t know what software your recipient will be using, sending your message in plain text helps you avoid any strange formatting issues.
  • Spell check — People will generally forgive small errors in email, but the more you can avoid the better. Make sure your email program has a spell checking capability. The best ones check your messages as you type them and underline misspelled words in red.
  • >Check email regularly — People expect to hear back from you when they email. You should check your email at least once each day and respond to messages
  • Spam filter — Make sure you have a spam filter to keep you from losing hours of work just deleting emails. Make sure it works correctly and doesn’t accidentally block emails from your customers.

Telephone

Email is becoming more and more important, but a business telephone is still important. Some people prefer to make contact by email and some may prefer to make contact by phone. Make sure you make it easy for people to contact you however they are most comfortable.

800 Number

It is fairly inexpensive to get a 800 number that forwards to an existing telephone line. An 800 number helps customers feel like they are dealing with a business that is used to doing business outside of just their local area.

A vanity 800 number is one where the letters spell something related to your company. This can increase your branding tremendously. Usually you will have to pay an additional charge to set this up. RingCentral has a tool that lets you easily look up vanity numbers to see if they are available.

Voice Mail

When someone calls your business they shouldn’t get a busy signal or no answer. Good voicemail systems can make sure that you get the message even when you are away. Advanced systems can handle call routing based on the time of day and even “hunt” for you by ringing a list of numbers until you answer. This can be useful if you are a small business and want calls to normally come to the office, but want to be able to pick them up from your cell phone if you have to step out of the office or drive out to a customers site.

Ideally you want a voicemail system that will send you a voicemail as an attachment in your email. This helps give you a single place to check for messages both written and verbal. It also make it easy to forward your messages on to someone else if necessary–even if they are not on your local voice mail system.

Cell Phone

Many small businesses find that a cell phone is the only phone they need. If you have a physical office you may be better off using a voip phone as your main number and just forwarding it to your cell phone when you are out of the office. If you do a small amount of talking on the phone a cell phone may provide all the minutes you need a a low enough price to make it difficult to justify another line.

If you have multiple employees, you may want to look for a plan that allows you to pool minutes. This works best with 5 or more people. Minutes used come from a pool, so if one employee is very busy on one month and another is gone on vacation you don’t have to pay extra for the busy employee and have unused minutes for the one on vacation.

Faxes

Many people still use fax technology instead of email. This is especially true when you need to send signatures back and forth. If you just need to receive faxes you can pay for an inexpensive service that will give you a phone number and email you any documents faxed to that number. eFax, CallWave, and RingCentral all have this feature. Some of these companies will even let you fax documents to others by emailing a document to a special email address or uploading your document on their website. If you don’t do a lot of faxing. One of these services and an inexpensive scanner can cover all of your faxing needs.

Health Insurance

Health insurance is one reason you should consider creating a corporation if you work for yourself. There are certain advantages that corporations get that are not available to you as an individual.

One of the advantages of creating a corporation is the way you can access insurance. .

Group Insurance

As an individual you can get insurance, however there are special laws that govern group insurance in most states. As an individual, insurance companies have much more freedom to charge you higher rates. With group insurance their maximum rates are limited by state law.

For example, if you and your wife apply for insurance as an individual and your wife is pregnant, the rates are likely to be very very high. Either that or they won’t cover the pregnancy. However, if you use your corporation to sign up for a group policy, some states limit how high the insurance company can raise the rates. These states also keep the insurance company from excluding you for a pre-existing condition.

So lets say that your premium would normally be $250 per month. The insurance company wants to charge you more because your wife is pregnant, but the state limits them to only raising the premium by 50%. So the insurance company can charge you $375 per month, but they can’t deny you coverage or charge you $2000 per month.

The laws vary from state to state, but most of the time group insurance will be a much better deal than buying as an individual. Group insurance is something you will need to purchase as a business not as an individual.

Most of the time you are required to have at least two employees to qualify for group insurance. This means you and your spouse will probably need to both be employees of the corporation and have separate insurance policies if it is just the two of you.

Tax Deduction for Insurance

At one point individuals were unable to claim a tax deduction for money spent on health insurance and health care. Most of this has changed now, and you can claim a deduction for your health care costs as an individual. However, by keeping your medical expenses within your corporation, you are less likely to drawn the attention of an auditor because traditionally businesses have had deductions for healthcare while individuals have not.

Your company can choose to insure you and pay for out of pocket medical expenses as well. This means the company can cover your co-payment and other healthcare expenses. Just keep in mind that you will probably be required to treat every employee in the same way. So you can’t have your company cover the deductible for you and your spouse, but expect other employees to cover it on their own.

High Deductible Insurance

The lower your deductible the higher the cost of insurance. By choosing a plan with a high deductible and setting up your company to cover all of the expenses not covered by insurance, you can usually save the most money if you are reasonably healthy.

By choosing a high deductible of several thousand dollars per person, you will have a low monthly payment. Just make sure you set aside the money within your company to cover the cost of the deductible should you or one of your employees need medical treatment.

Corporate Policy for Healthcare

When setting up health insurance it is important that you document your policy. Most of the time you must have the same policy for everyone. As owners of the company, you cannot give yourself one set of healthcare benefits, but give everyone else something else. There are certain ways around this, like tying healthcare to a minimum term of service or creating two companies–one for your employees and one for yourself. However, what will look best if you ever end up in an audit is a clear policy where everyone is treated fairly and in the same way.