Is Your Business Spending Too Much on Health Insurance?

Ever ask yourself if too much money is going out on health insurance for your employees?

The answer is probably yes, but there are ways to get employee healthcare costs down. And, with more and more smaller businesses cutting insurance plans and losing valuable employees, affordable health insurance is essential.

Although the healthcare issue is an ongoing debate in the business world and the rest of the country, there are cost options as long as your small business is willing to make a few changes.

Here are just a few reasons why healthcare costs for small business owners are so high as well as a few ways to cut the cost when it comes to insuring your staff:

Small Business Health Insurance

There are a number of reasons that contribute to the high cost of healthcare for small business owners and employees, most of which stem from government taxes.

According to the Council of Economic Advisors, small businesses pay up to 18% more per employee than larger corporations for identical insurance policies. Why?

Well, the United States healthcare system imposes strict taxes on small business due to administrative costs and steep broker fees. Because of this, only 49% of small businesses actually provide health insurance policies to their employees according to the CEA report.

In addition to the government taxes, small businesses are charged more for health insurance simply due to size. Small businesses lack bargaining power because there isn't as much profit involved for insurance companies due to the small number of employees.

Likewise, if one small business employee has a chronic illness or pre-existing condition, the cost of insurance goes up for the entire staff whereas, if it were a larger corporation, that cost would be absorbed due to the large number of employees.

How Small Businesses Can Save Big

In order to retain valuable employees and satisfy the needs of your staff, healthcare is a must.

And, thanks to new reforms, acts, and money saving techniques, small business healthcare is becoming much more affordable, at least in the eyes of some.

Among the options:

• Obamacare - The Obama Administration says it is making it easier for both small businesses and individuals to afford healthcare through an insurance exchange. The exchange provides equal and competitive insurance rates for businesses regardless of size.

• Small Business Cooperatives - When small businesses join healthcare cooperatives, they're able to increase their negotiating power. Depending on the area, many small business insurance cooperatives offer a multitude of plans at drastically reduced rates compared to small businesses purchasing insurance on their own.

• Higher Deductibles - Offering high-deductible insurance plans give small businesses an affordable option. Although the deductible is higher, the premium is much lower which may result in your employees going the extra mile when it comes to practicing good health.

• Salary-Dependent Costs - By making insurance plan costs dependent on employee salary amounts, everybody wins. So, those employees in the upper salary bracket would pay more for insurance while those in the lower bracket would pay less. This levels the insurance playing field for your small business altogether.

• Small Business Wellness Programs - Wellness programs are beneficial on two levels: they lower the overall cost of your small business's insurance plan and they make employees healthier by promoting healthier lifestyles. So whether it's providing employees a gym membership or encouraging exercise breaks, wellness programs are worth it.

By keeping in mind what affects insurance costs, your small business will have the opportunity to provide healthcare for all its employees.