At the nearly 6 million U.S. businesses that have more than one person on the payroll, a lot of employees are unhappy about their health insurance.
A study this year by insurance company Aflac found that employees of small businesses are less satisfied with health insurance and other benefits than employees of midsize and large companies are.
On top of that, employees at small businesses are more likely to think their benefits aren't up to snuff compared with benefits for workers at bigger companies.
Your employees don’t have to be down in the dumps about their insurance coverage, though. Here are seven mistakes to avoid when it comes to buying health insurance for your small business.
Not examining all the options.
For instance, do you pick a low-deductible plan to please employees or a high-deductible plan to save money
“As with any other insurance, don’t make your decision on price alone. In insurance, you often get what you pay for, and that can be more expensive in the long run,” insurance consultant Dan Weedin says.
Not hiring an experienced broker.
Reach out to friends and business associates for referrals, experts say.
Aimee Elizabeth, an entrepreneur who wrote the book “Poverty Sucks! How to Become a Self-Made Millionaire,” says you should interview each broker you’re considering – and should not automatically hand your business to a broker
“Explain what you need and why,” Elizabeth says. “See if he actually listens and understands, or if he rolls his eyes, interrupts you a lot and tries to shove his preconceived plan down your throat. You want the first guy, not the second.
Not doing homework.
“If you do your research, you will know what you want and what it should cost you,” Elizabeth says. “So, you’ll have a leg up on your broker, and you’ll know if he’s trying to bamboozle you or not.”
Not sticking to a budget.
“Know your budget going in, and don’t waver,” Elizabeth says. “If you don’t know your budget, you can easily end up with buyer’s remorse when you wind up buying a package that leaves you penniless.”
Not shopping around.
Whether on your own or through a broker, get quotes from several health insurance companies, not just one.
“Make sure you don’t take the first option put in front of you. Once you have you looked at the major providers to ensure you have seen a full range of options regarding your health care options, then focus on making a clear decision,” says Pete Villemain, president of Employee Benefit Services Inc., a benefits administrator.
Not asking about tax-friendly accounts.
Health savings accounts (HSAs), health reimbursement arrangements (HRAs) and flexible savings accounts (FSAs) can give your business an edge when it comes to employees’ health insurance.
An HSA lets someone who’s covered by a high-deductible health insurance plan sock away money for medical expenses – without that money being taxed by Uncle Sam. An FSA allows someone to put pre-tax dollars toward out-of-pocket health care expenses, such as prescription drugs, that aren’t fully covered by insurance. An HRA is an employer-established health insurance plan that reimburses employees for eligible medical expenses.
Whichever benefits an employer chooses, “communication and education to the employees are vital to make sure plans are understood and utilized to maximize benefits and have a healthy, productive workforce,” says Onofrio Cirianni, managing member of EisnerAmper Wealth Management & Corporate Benefits LLC, a financial planning company.
Not offering more than one health insurance option.
In the workplace, one size does not fit all. If a company provides several plans, participants will be able to choose – based on their finances and medical needs – a lower-premium, higher-deductible option or a higher-premium, lower-deductible option, Cirianni says. The first option might be best for a young, healthy employee, she says, while the second might be right for an older, less healthy employee.
Elizabeth says that from an employer’s vantage point, “while you don’t want to overpay, the cost of the insurance is not the most important factor – retaining your quality workers is.”
John Egan is managing editor of NetQuote.com, a website owned by Bankrate that allows people to shop for insurance and that provides information and advice about insurance. Follow him on Twitter at @JohnJEgan.
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