As a small business owner, you may be thinking about providing group employee benefits for your employees. There are many “benefits” (no pun intended) to providing this kind of service for your employees. There are many different insurance companies with many different programs. Generally speaking, there are six types of benefits you should at least consider when selecting which to include in your package.
1) Health Insurance: Health insurance protects against the risk of medical expenses. There are many health insurance companies with many different types of programs and options. It is best to do some research to see which insurance company is best for your company and employee’s needs. Two very popular insurance programs are HMOs and PPOs.
- HMOs, or health maintenance organizations, provide managed care for insurance companies. HMOs cover services of doctors who agree to treat patients under HMO guidelines. Under HMOs, individuals usually select a primary care physician and need to obtain referrals in order to see other doctors or specialists. These referrals are only given when the HMO plan deems the services necessary.
- PPOs, or preferred provider organizations, are subscription based and the employee can visit a network doctor without going to a primary care physician for a referral. Doctors and hospitals work with insurance plans in order to provide care at reduced rates. Most PPO plans also allow you to visit a non-network doctor, but you pay a higher deductible and/or Co Pay.
- High deductible HSA plans are also gaining popularity. The premiums can be significantly lower than a PPO and this option allows the employee to set up a qualifying bank account and make contributions from which they pay the expenses that fall within the deductible. The contributions to the HSA that are not used in the calendar year roll over to the next year.
2) Vision Plans: Usually offered as an addition to a general health insurance plan, but can be purchased stand alone, vision plans provide reimbursement for vision services. This insurance would be used when visiting an optometrist or ophthalmologist for services such as eye exams, eye glasses or contact lenses.
3) Dental Coverage: Generally offered in addition to a general health insurance plan, dental insurance provides individuals with insurance for dental care. Dental plans vary, but generally speaking they cover (partially or in total): basic cleanings, fillings, x-rays, periodontics, endodontics. Some plans may even cover parts of oral surgery, crowns, implants or dentures. Some carriers offer HMO and PPO dental options.
4) Group Life: Life Insurance can be purchased on the group with a set limit for the group or set limits by job/class. The coverage is term, is reasonably priced and is available while the individual is employed by the company. While a Group Life program can be purchased stand alone, most employers will combine as part of the overall benefits package.
5) 401K : 401K plans are a great way for employers and the owners to provide a vehicle to create a retirement income pool. Individuals contribute a percentage of pre-tax income into a qualified plan while they are working and later receive funds from the plan upon their retirement. The investment income accumulates tax free and the recipient pays income taxes as the funds are distributed, usually at a lower rate. Individuals can start withdrawals without penalty upon turning 59 ½. Many employers will provide a matching contribution based on a formula that may include company profitability.
6) Disability (Short and Long Term): this type of insurance protects those who become disabled and are unable to work. Short-term disability insurance generally pays a percentage of a disabled employee’s salary for a certain amount of time after a short waiting period of 7-14 days. Each state has different guidelines and rules regarding short-term disability; some states require benefits be provided for up to 26 weeks. Long-term disability insurance is more popular among employers. If an employee is unable to work for a long period of time due to disability, this coverage will pay a part of the employee’s salary. The amount of money that an individual will receive often depends on their position and how much coverage their company provides. Many employers will provide both STD and LTD as complimentary products.