The other day I asked a small business owner friend of mine if she offers employee health insurance. She looked down and shook her head. “There is just no way my business can afford it,” she told me.
After some research, I found that while some small business owners feel the same way, others take a totally different approach.
Bryan Burkhart fits into the latter category. In April 2010, he launched H.BLOOM, a New York City-based subscription flower delivery service, which offers full health insurance at no financial burden to employees. Although the benefits cost the company about 33 percent of each worker’s salary (gulp), Burkhart stands by his decision.
“On the recruiting and retaining side, it makes us more competitive in the marketplace and takes concern off the table for our employees; when they are not thinking about how to cover health insurance, they have more passion to direct towards the business,” he says.
His investment has paid off. Since launching 15 months ago, H.BLOOM is growing rapidly with 40 employees and hardly any turnover.
“Typically, the first year of business is very volatile, but we’ve had almost zero turnover; I really think the benefits of offering health insurance outweigh the costs,” he adds.
Convinced you should offer healthcare? Before diving into a plan, consider these dos and don’ts:
Do…ask your employees what they want
Be careful on this one—asking employees about their specific health concerns can land you in a hot legal mess. Instead, take Tate Linden’s approach. A few years back, he launched Stokefire, an Alexandria, Virginia-based strategic marketing firm, and early on, polled employees on their concerns.
“I asked them, ‘What can we do to serve your needs?’ and they immediately started talking about healthcare,” he says, adding that, like H.BLOOM, the company now offers full benefits at no cost to employees.
Do…price out the cost/benefit ratio
Do your employees often come in sick to work? Are you working in close quarters where contagious diseases could easily wipe out your entire sales force? Do you have high turnover? If you nodded your head to even a couple of these questions, it’s time to price things out.
“Look at how many days you are losing to sick and if those sick employees are taking out the rest of the team; consider how much money people are bringing in by being in the office, and after looking at the number you may see that health benefits are worth it,” says Linden.
Still worried about cost?
There are low-cost options to consider, says Kenneth C. Wisnefski, founder and CEO of WebiMax, an online marketing company based in Mount Laurel, New Jersey.
“There are minimal benefit plans for even the most cash-strapped business; just explain to your employees that you are not in a position to do more, and that effort will help them buy into your culture without you putting forth a lot of money,” he says.
Do…shop around
Linden suggests talking to several brokers before deciding on a plan.
“Also, always try to negotiate; it is a bit like buying a car,” he adds.
Try hiring an HR outsourcing company; they often have relationships with brokers and insurance companies and can negotiate favorable terms.
Don’t…make it confusing
Insurance plans can be really perplexing, and no one likes to sift through a mountain of explanatory paperwork. When my husband got a new job, we were forced to decipher a 100-page, jargon-filled brochure to choose the plan that worked for us. I still wonder if we made the right decision.
“Take the time to present the plan options in a clear fashion; when we started offering benefits, our broker gave a big presentation about the options, which really helped to answer employee questions,” says Wisnefski, adding that it’s important to assign a point person in the company (or accessible broker) in which to direct questions about the plan.
Don’t…let it go
After your due diligence on brokers, insurance companies, and/or HR outsourcing companies, keep in touch with them on a regular basis. Wisnefski recommends meeting with your vendor at least twice per year to review your plan.
“Keep evaluating your plan as your company grows or decreases in size,” he advises.
Don’t…trust that charges are legit
Insurance companies can sometimes mess up the money side of things. Incorrect invoices can prove to be major headaches for small business owners, so it pays to review them regularly.
“If there is one invoice I look at the hardest, it’s that from the health benefit company; there seem to be a lot of errors—once I had an former employee still on the plan three month after termination—I check those invoices all the time,” says Wisnefski.