regarding the offer health benefits, there are some different contribution strategies a company can take. In other words, there are different ways to structure and pay for the plan.
To achieve lower financial risk and control costs, many small businesses choose to move employees to the individual health insurance and offer health benefits for employees with a defined contribution strategy - where the company repays the premiums instead of paying for them. This strategy is also known as individual health insurance funded by the employer.
So how this approach creates efficiencies and reduce financial risks? There are five ways. Let's take a look.
# 1) Contact Controls the amount of the contribution
With individual health insurance and strategy defined contribution plans, the company sets up a tax-formal repayment intended to give employees an amount of the monthly contribution to be used for premiums
There are no requirements on how much the company can provide each month - the amount of .. contribution is fully in society
Moreover, companies can use classes of employees to provide different amounts for different types of employees (it is licensed as the differences are based on employment criteria bona fide). This is important because it allows a company to direct limited resources to its most valuable employees.
to decide how to provide employees, some companies are watching how much they can afford and contributions divided accordingly. Other companies, especially those that currently offer health insurance coverage, look at how individual health insurance policies will cost employees and provide a similar percentage of contribution. Which leads to reason two.
# 2) On average, individual health insurance premiums cost less
One of the major reasons for this approach creates cost savings, on average, premiums individual health cheaper. This may go against what you heard. Many believe the insurance provided by the employer is cheaper. When you look at the data, however, just the opposite is true
The following data (national average) for 2014 :.
| | health insurance individual (without premium tax credits) | individual health insurance (with premium tax credits) | Health Insurance Group |
| Single | $ 346 / month | [194501882] $ / month | $ 502 / month |
| family | $ 667 / month | (data not available) | $ 1,403 / month |
See also: Why individual health insurance is more affordable than group health insurance
# 3) No increase in annual renewal
If you currently offer health insurance provided by traditional employer, you know the drill. A few months before your plan renews you get a notice about how much your premiums will cost for the new year. Most companies (0 percent according to a poll) found annual increases this year, with nearly a quarter to see increases in the double digits.
With individual health insurance and a defined contribution, however, there are no annual renewal increases.
the only time the maximum cost increase is if the company decides to increase the amount of contributions, or if the additional employees were added to the repayment plan.
for companies used to process renewal of annual increases, with full control of the budget in the short term and long term is revolutionary.
# 4) contributions are notional, and company-owned
The fourth way in which this approach creates cost savings and control is because contributions are theoretical - the company reimburses employees directly after the premium health insurance at the expense of an employee is verified. For businesses with tight cash flow, this can be beneficial because there is no obligation to fund the bank accounts of third parties.
In addition, all contributions are the property of the company and employees are not reimbursed for eligible expenses up to the amount of their health balance.
If an employee receives a / month $ 300 contribution and the premium is only $ 250 / month, then he or she is paid only $ 250 / month. And any unused funds remain with the company at the end of the plan year or when an employee is terminated.
# 5) employed Save money, too
The latest cost saving advantage is that employees save money, too. This is especially important in today's market as the rising cost of health care has caused many employers to shift premiums and out-of-pocket costs for employees
individual health insurance funded the employer saves money because employees :.
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As discussed earlier, individual insurance costs less disease. Employees will generally pay less for the same or better coverage quality on the retail market, and the employer contribution will go further.
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Eligible employees can access premium tax credits through the markets. Be offered this type of repayment plan (a section 105 scheme of reimbursement of health care) does not disqualify employees receive premium tax credits. Employees may be eligible if they are less than $ 47,080 in 2015 (single) or $ 97,000 (family of four)
Related :. How to calculate cost savings: Medicare Group vs. redemption premium
Conclusion
to save money and reduce the financial risk - and to offer quality services - small employers are turning to employee insurance -health individual and offering a definition contribution. This approach works because your company - not the insurance company - control the cost of health benefits. In addition, the individual costs of health insurance less and are built in cost control in how the plan is structured.
Because of these cost saving features, it is no surprise that some industry experts predict a significant change in the years to come from the health insurance provided by the employer to the individual health insurance funded by the employer.
What questions do you have the cost savings of switching to individual health insurance? Join the conversation with a comment or question below!
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