Health insurance for small businesses has often come at a high cost, particularly when a workforce may be small and workers have preexisting conditions or need a variety of coverage for various conditions within one employer group health insurance plan, but there are options through tax credits and different coverage options that may be more beneficial for particular companies when it comes to lowering costs on premiums related to an employer’s particular health insurance policy. Obviously, a recent tax credit that was offered for businesses is hoped to make costs more affordable so that companies will either keep their insurance or consider getting a new plan, but some businesses are simply changing their coverage options to find more affordability and avoid cutting health insurance altogether.
While the new legislation that will bring about change in the health care industry will require that businesses provide health insurance or face a penalty in 2014, there is concern that certain businesses may be able to pay this particular penalty more easily than health insurance costs, but alternatives are being offered in the hopes of showing companies that they can provide coverage for their workforce at an affordable cost, even if they have a small number of employees.
As an example, the Small Business Health Care Tax Credit began for the 2010 tax year, allowing companies to claim this credit in 2011, which could provide a 35% income tax credit for employers that pay a high amount in premiums for workers. Essentially, companies who have fewer than 25 full-time employees whose wages average less than $50,000 per year may qualify for this credit, but the percentage of the credit will be reduced to as the average annual wage of workers at a company increases over $25,000 per year.
Claiming this tax credit has been helpful for some businesses as, again, it can help reduce the impact that a business feels when paying premiums for their workers, as some businesses have felt such a heavy burden in the area of providing health insurance that they have simply eliminated coverage for workers or required that their employees carry a larger share of health insurance premium contributions. While having workers pay more for health insurance has been another method that some businesses have used to avoid cutting health insurance altogether, there are some instances where businesses may be able to reduce the overall costs they pay by implementing certain practices or seeking out alternative coverage options.
Particularly in a small business environment where there are not many employees, businesses can be more specific about their health insurance wants and needs due to the fact that some workers at a business may benefit from high deductible health insurance plans, if an employer’s work force rarely visits the doctor. Understandably, this is not an option for all companies, but high deductible health insurance plans and health savings accounts have been a way that some businesses and employees have been able to pay lower premium costs, keep health insurance that will guard them against excessive medical expenses, and with the help of a health savings account these individuals can simply pay routine visit costs or their deductible with funds they have saved throughout the year. While companies typically review their health insurance policy annually, in the hopes of finding more affordable options through either cutting costs or working with a different insurance provider, taking advantage of tax credits or opportunities like high deductible plans in cases where workers may not need a great deal of medical care throughout the year have been viable options that some businesses can use to not only keep health insurance plans in place but even begin offering some form of coverage for employees.