The Hurdles Of Health Insurance For Small Businesses

Health insurance for small businesses has historically been one of the most challenging issues to effectively running a small company. The cost of healthcare has only increased in the last few decades, making the issue more important for both employees and employers. Successfully implementing a healthcare option for 100 employees or less is much different from doing so for 100 employees or more for several reasons. Among these reasons is the high cost to add one more employee for a small business, the necessity to compete with the resources of large companies, and the way a small business owner must figure it all out without the help of a human resources department. 

High Cost per Employee

The cost of adding an additional employee to a health care plan goes down with each new employee. This means, for a large company, the cost to add one more person or family to a policy is relatively small. For a small business, however, the cost of adding one more employee may be 20% of the total expense the company is currently spending on health insurance. This can create a significant hurdle in taking on an additional employee; it is hard to find affordable health insurance for a small business that does not charge a lot for one more person. Most small business end up electing employees to wear many hats to cut back on this cost, which can make them less competitive on the market than companies that can afford specialized employees.

Competing with Large Companies

In order to attract top talent, a small business in 2009 has to offer benefits. Without benefits, talented individuals are likely to explore other options. However, it is virtually impossible for a small company to compete with a big business on this level. Small businesses end up exploring other benefits, such as a relaxed dress code, in an attempt to make up for the lack of healthcare financing. This may have worked in the past. As the labor market gets more competitive and the cost of healthcare continues to rise, though, health care reform for small businesses may be the only option to keep them competitive with large corporations. 

Doing it All Yourself

Adding to the stress of answering the healthcare question is the fact you, as a small business owner, have to do this all yourself. Large companies may rely on human resources teams with extensive backgrounds in benefits packages. They may also have an insurance consultant or brokerage firm on retainer to help them navigate the costs. For a business owner who lacks individuals with this knowledge on his side or her side, the result is self-navigating a very complicated field. One option for overcoming this problem is to outsource your human resource needs to a staffing agency. These agencies often handle payroll functions and benefits for your employees. They will bundle your healthcare cost with those from other small businesses, essentially making you like a large business to the insurer. The expense to outsource this need can be offset by healthcare savings.

blog comments powered by Disqus