Because
group insurance rates are two to three times as
expensive as individual plans, we believe
that the best option for most small businesses of
less than 20 employees is to let the employees sign
up for individual coverage, rather than group coverage.
These are the main advantages of this strategy:
- Individual
plans are 100% portable, meaning that they are
not tied to the employer's business. The
employee can take the coverage with them, wherever
they go.
- Because
they are individually underwritten, they are much
less expensive. However, this also means
that someone could be declined due to pre-existing
conditions. So individual plans only work
if the employees are all in good health.
An
employer cannot pay for individual health insurance,
but you can reimburse your employees tax-free through
a Section 105 HRA Plan. An HRA, or Health Reimbursement
Arrangement, is simply an agreement that the employer
makes to reimburse certain medical expenses, including
health insurance, that the employee incurs.
The reimbursement is considered a tax-free fringe
benefit to the employee, and a business expense
for the employer.
The
end result is that you may be able cut your costs
in half, while providing your employees with
better coverage. This works well for small
businesses with healthy employees. To learn
about whether individual health insurance coverage
and an HRA plan is right for you and your employees,
please enter your contact information below to order
our special report:
105
HRA Plans For Small Business Owners
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