Health Insurance for Employees: The Why, The What, and The How

Health insurance is one of the most attractive benefits for job seekers, and can be a huge factor in retaining current employees. With access to health insurance, employees (current and future) can maintain their health and wellbeing. Once you’ve made the decision of seeking to offer health insurance at your company, what’s your next step? Our guide will outline health insurance options, considerations when choosing plans, how to implement the plans you choose, and why offering health insurance for employees is important.

Why Provide Health Insurance for Employees?

Before we get into the nitty-gritty, let’s review the why. Offering employee health coverage has a number of benefits:

• Attracts talent: Competitive health benefits can make your company more appealing to potential candidates.

• Retains employees: Employees are more likely to stay with a company that offers health insurance benefits.

• Boosts morale and productivity: Healthy employees are generally happier and more productive.

• Provides tax advantages: Employer contributions towards health insurance premiums are typically tax-deductible.

Understanding Health Insurance Options

We’ve got the Why down, now let’s dig into the What. When it comes to health insurance options, there are several to consider. Each type has its own set of benefits and limitations which we’ve outlined below.

Group Health Insurance Plans

Group health insurance plans are a common option for employers looking to provide health coverage to employees. These plans are usually offered by insurance companies and cover a group of people, such as the employees of an organization.

• Pros: Group plans are often more affordable than individual plans — this is because risk is spread over a larger group. Group plans can also be tailored to fit the needs of your employees.

• Cons: Group plans may not offer as much flexibility as individual plans can.

Health Maintenance Organization (HMO) Plans

The prominent feature of Health Maintenance Organization (HMO) plans is that they require employees to choose a primary care physician (PCP) and get referrals from that PCP in order to see specialists.

• Pros: HMO plans often have lower out-of-pocket costs, including premiums and copays.

• Cons: HMO plans have less flexibility in choosing healthcare providers.

Preferred Provider Organization (PPO) Plans

Preferred Provider Organization (PPO) plans are great because they offer more flexibility in choosing healthcare providers. They don’t require referrals to see specialists, either.

• Pros: PPO plans offer greater flexibility in choosing healthcare providers, and referrals aren’t required.

• Cons: PPO plans have higher premiums and out-of-pocket costs.

High-Deductible Health Plans (HDHP) with Health Savings Accounts (HSA)

High-Deductible Health Plans (HDHPs) are insurance plans that can be paired with Health Savings Accounts (HSAs). HSAs function to allow employees to save pre-tax money for medical expenses.

• Pros: HDHPs offer lower premiums, in addition to the tax advantages of an HSA.

• Cons: HDHPs require higher out-of-pocket costs before the deductible is met.

Self-Funded Plans

While less common, self-funded plans are an option for employers who are prepared to assume the financial risk of providing health insurance.

• Pros: Self-funded plans are more customizable to fit the specific needs of employees. There can also be potential cost savings.

• Cons: Self-funded plans impose increased financial risk for employers, which requires careful planning and management.

How to Choose the Right Plan

With the knowledge of plan options under your belt, let’s look at some factors you should consider before choosing employee health coverage.

1. Assess Employee Needs

Before you can choose health insurance for employees, it’s crucial to understand their needs and preferences. You can do this by conducting surveys or holding meetings to get feedback on what employees value most in health insurance plans.

2. Compare Plans and Providers

With a clear understanding of your employees' needs, you can then compare different health insurance plans and providers. Make sure to review the coverage options, costs, network of providers, and any additional benefits offered. It may be helpful to consult with a broker or consultant to help you navigate the options and find the best fit for your organization.

3. Consider Your Budget

Cost is an obvious factor for almost every employer. Determine how much can be spent on health insurance (and remember that employer contributions are usually tax-deductible). Considering the cost of benefits alongside which ones you’ll provide is necessary to ensure you and your employees get the most value.

4. Research Legal Requirements

What many employers don’t consider right away are the legal requirements of offering health insurance. It’s important that you understand the legal requirements for providing health insurance in your state and industry. For example, the Affordable Care Act (ACA) requires employers with 50 or more full-time employees to provide health insurance that meets certain standards.

Implementing the Health Insurance Plan

You’ve done all the hard work of choosing the right employee health coverage. Now you’ll need to implement it — here’s where to start.

Communicate with Employees

First and foremost, clearly communicate the details of the health insurance offering to your employees. Make sure they understand the coverage options, costs, and how to enroll. It can be helpful to hold informational sessions or provide written materials to help employees catch on and get the most out of their benefits.

Complete Benefits Enrollment

Establish a smooth enrollment process. Provide clear instructions and deadlines for enrolling in the health insurance plan. Offer assistance to employees who have questions or need help with the enrollment process.

Review and Adjust Regularly

Managing a health insurance plan is an ongoing process. Regularly review the plan to ensure it continues to meet the needs of your employees and your budget. Make any necessary adjustments based on feedback and changes in the healthcare landscape.

Additional Benefits to Consider

Health insurance is just one part of a comprehensive benefits package. You might consider including other offerings that enhance your employees' health and wellbeing.

Dental and Vision Insurance

Dental and vision insurance are fairly popular add-ons to health insurance plans. They provide coverage for routine dental and eye care, which are important for overall health.

Wellness Programs

Wellness programs can include gym memberships, smoking cessation programs, weight loss programs, and more. These offerings can help improve employee health and reduce healthcare costs.

Flexible Spending Accounts (FSA)

Flexible Spending Accounts, or FSAs, allow employees to set aside pre-tax money for medical expenses. This can be a highly valuable benefit, especially when paired with a high-deductible health plan.

Retirement Accounts

Retirement accounts like 401(k)s and Roth IRAs are a thoughtful benefit employers can offer their employees. Employers can opt to contribute a certain amount per pay period. Even without employer contributions, retirement accounts can provide your team with a valuable resource to help plan for their future.

Providing health insurance for employees is an important step in building a healthy, productive workforce. Remember to communicate clearly, manage the plan effectively, and consider additional benefits to enhance your overall employee benefits package. By taking these steps, you can provide your employees with the health coverage they need while also supporting the growth and success of your business.

How Justworks Can Help

If you’re ready to offer health insurance to your employees, Justworks is ready to help. We provide access to a variety of health insurance plans from top national carriers, which can attract the candidates you’re looking for. Once you’ve hired the ideal employees, benefits setup and enrollment become a breeze with our user-friendly platform.

You (and your employees) will also get access to other quality benefits like 401(k)s, mental health benefits, primary care, fertility benefits, and more. Justworks offers access to wellness services available along with your health insurance coverage, at no additional cost. If that sounds like something your company could benefit from, get started with Justworks today!