Did your health insurance rates go up or down this year? By how much? Also: how much do you spend on health insurance as a percentage of your revenue? And how big was your business when you started offering your employees health insurance? If you don’t yet offer it, what might prompt you to do so?
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Many years ago we used to have a company sponsored health insurance for our employees,.
After some years an attorney friend who specializes in employment law told me that if I had two people who were doing the same job but one was 60 years old and the other was 25 years old and I was paying for their healthcare insurance, I was essentially discriminating against the younger worker because I was paying 3x more for the older worker's health insurance than the younger worker...so their benefit was 3x doing the exact same job.
Additionally, some other employees already had health insurance (better) from their spouse or from the VA (he was a retired vet).
With this information, we decided about 15 years ago to now offer every one of our employees a "health insurance stipend" each month.
The stipend is based on a 45 year old male in a medium deductible health plan (later codified as "silver" plan). We pay 50% of that premium rounded up to next $25. We were paying about $250 per month per employee for many years...but 2 years ago, because of increased premium costs, we raised it to $275 per month.
This way it's completely transparent so anyone can do the calculation.
If a person is younger, the $275 pays for more of their monthly premium if they are older then there is more out-of-pocket for their premiums..
If they have insurance from another source then they just keep the money
If they choose, they can buy a Bronze plan or a Gold plan...it's totally up to them. Myself, I prefer the HSA eligible Bronze plan, since I'm very healthy and I can take the money I would have spent on premiums and put it into a HSA to pay for my higher deductible.
We are downsizing from a large plan and like your alternative. Do you give the monthly stipend as regular pay or as a pre-tax benefit? How long from hire date before they are eligible? What about part-timers if you have them?
The stipend is considered regular pay because we don't actually monitor how the stipend is used (we just send them to the insurance exchange to buy whatever they want...or nothing at all). The stipend is paid to all full-time (more than 30 hours per week) beginning 90 days from their hire date (it used to be 6 months...but we lowered it to 3 months for the last group of hires last May due to COVID...which now has become the new standard). Even the non-permanent employees (typically those who are working on an OPT / F1 visa) are eligible after 90 days.
We spend about 3/4 of 1% of our revenues on healthcare or about 1.8% of gross profit (we like to think in terms of gross profit since we're a products based company)
We went with a health insurance stipend like Jim about 3 years ago because it was simple to execute. We give each employee $300 per month towards their insurance. We were under 10 employees then. We are a team of 35 today, and we will most likely pass 50 this year. Our challenge is now switching to healthcare due to federal law, but with employees in 7 states I am concerned about finding good coverage at a reasonable price. Any advice would be greatly appreciated.
Thanks for responding. Can you tell us what percentage of your revenue you've been spending on health insurance? I hope we'll hear from some companies with more than 50 employees in multiple states!
My net cost of health insurance, after I deduct the employee participation, is 1.8% of sales. It keeps going up every year, well above inflation.
Many years ago we used to have a company sponsored health insurance for our employees,.
After some years an attorney friend who specializes in employment law told me that if I had two people who were doing the same job but one was 60 years old and the other was 25 years old and I was paying for their healthcare insurance, I was essentially discriminating against the younger worker because I was paying 3x more for the older worker's health insurance than the younger worker...so their benefit was 3x doing the exact same job.
Additionally, some other employees already had health insurance (better) from their spouse or from the VA (he was a retired vet).
With this information, we decided about 15 years ago to now offer every one of our employees a "health insurance stipend" each month.
The stipend is based on a 45 year old male in a medium deductible health plan (later codified as "silver" plan). We pay 50% of that premium rounded up to next $25. We were paying about $250 per month per employee for many years...but 2 years ago, because of increased premium costs, we raised it to $275 per month.
This way it's completely transparent so anyone can do the calculation.
If a person is younger, the $275 pays for more of their monthly premium if they are older then there is more out-of-pocket for their premiums..
If they have insurance from another source then they just keep the money
If they choose, they can buy a Bronze plan or a Gold plan...it's totally up to them. Myself, I prefer the HSA eligible Bronze plan, since I'm very healthy and I can take the money I would have spent on premiums and put it into a HSA to pay for my higher deductible.
We are downsizing from a large plan and like your alternative. Do you give the monthly stipend as regular pay or as a pre-tax benefit? How long from hire date before they are eligible? What about part-timers if you have them?
The stipend is considered regular pay because we don't actually monitor how the stipend is used (we just send them to the insurance exchange to buy whatever they want...or nothing at all). The stipend is paid to all full-time (more than 30 hours per week) beginning 90 days from their hire date (it used to be 6 months...but we lowered it to 3 months for the last group of hires last May due to COVID...which now has become the new standard). Even the non-permanent employees (typically those who are working on an OPT / F1 visa) are eligible after 90 days.
That's really interesting, Jim. Thanks for responding. Do you know what you are spending on the health insurance stipends as a percentage of revenue?
We spend about 3/4 of 1% of our revenues on healthcare or about 1.8% of gross profit (we like to think in terms of gross profit since we're a products based company)
MCS is very, very small. We've been naked since ACA started since the penalty has always been more financially palatable than the premium.
We went with a health insurance stipend like Jim about 3 years ago because it was simple to execute. We give each employee $300 per month towards their insurance. We were under 10 employees then. We are a team of 35 today, and we will most likely pass 50 this year. Our challenge is now switching to healthcare due to federal law, but with employees in 7 states I am concerned about finding good coverage at a reasonable price. Any advice would be greatly appreciated.
Thanks for responding. Can you tell us what percentage of your revenue you've been spending on health insurance? I hope we'll hear from some companies with more than 50 employees in multiple states!
We spend around 4% of revenue. Based on expected 2021 growth, this should fall to ~3.3%.
Some of your employees may want to look into health sharing plans as a lower-priced alternative to health insurance.