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4 Ways Small Businesses Can Navigate Healthcare Costs – SHOP, Medical Cost Sharing, And More

According to a survey sponsored by AHIP, you have to make sure your employees are satisfied with their health benefits if you want them to stay. The results also showed that over half of US adults considered health coverage as a major factor when deciding whether to stay with their current employer. 

But for small businesses that are still finding their footing, factoring in healthcare costs is easier said than done. According to PeopleKeep, the average annual cost for a group health insurance premium amounts to $7,470 for single coverage. 

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Then there are the administrative costs. Managing an employee healthcare plan can be labor-intensive, as applications, renewals, communicating with providers, and keeping up with regulation changes can all take away precious work hours.

So how can small businesses and emerging franchises keep their employees healthy and happy without suffering financially? One such solution is medical cost sharing or a healthcare sharing program.

What is Medical Cost Sharing?

Medical Cost Sharing is an innovative non-insurance solution for managing large, unexpected medical expenses.

The Health Cost Sharing program is a voluntary, self-funded plan for employees that provides short-term assistance with medical bills in the event of an injury or illness.

Medical Cost Sharing’s members are only required to pay their share of eligible costs for treatment and services rendered. This shared responsibility reduces the financial burden on individuals while providing necessary coverage against unexpected expenses like emergency room visits, hospitalization, doctor’s appointments, prescription medication, lab work, and more.

Medical cost sharing plans have no waiting periods and also offer travel health coverage as part of the service benefits package.

Do you have health insurance for your franchise?

Medical Cost Sharing is a proven alternative to the insurance status quo. EmmerScale has partnered with Sedera to offer effective and affordable non-insurance solutions to emerging franchises and small businesses. 

A few other ways a small business and franchises can offer healthcare coverage to their employees include:

1. Check Out The SHOP Marketplace

Under the Affordable Care Act, businesses with 50 or fewer employees can shop for health plans on the Small Business Health Options exchange – a state-sanctioned marketplace for small business owners who want to provide their employees with a health insurance plan “affordably, flexibly, and conveniently”.

Through SHOP, employers:

  • Allow their employees to choose from insurance companies and various plans
  • Decide how much to pay towards premiums
  • Establish how long new hires have to wait before they can start enrolment

Using the SHOP marketplace doesn’t just provide more options to business owners and employees, it allows businesses to qualify for tax credits too. If you have fewer than 25 full-time equivalent employees getting paid an average of $50,000 or less, you may be eligible for a Small Business Healthcare Tax Credit that provides up to 50 percent of what you pay for employees’ health insurance plans. 

2. Experiment With Medical Cost-Sharing

Let’s say your current health insurance company increases its rates this year. You can either migrate to a provider that offers cheaper and inferior plans, or you can maintain your plan and offer a range of cost-sharing options to your employees instead.

How does cost-sharing work? The most common way people go about medical cost-sharing is by paying only a portion of the plan premium (usually about 50 percent), then requiring their employees to shoulder the rest via paycheck deductions. As an employer, you can also require your employees to shoulder a portion of or all of the premiums for their dependents. 

The advantages of cost-sharing in healthcare are plentiful. It eases a bit of the financial burden off your back, all while allowing you to provide options for your employees. 

Other options you can experiment with include copayments, coinsurance, deductibles, and out-of-pocket expenses. 

3. Try A Health Reimbursement Arrangement

If you want to look at non-insurance healthcare services, you can try the Health Reimbursement Arrangement – an employer-funded healthcare alternative that reimburses qualifying medical expenses of employees.

It’s important to note that an HRA is not an account from which employees can withdraw from. Instead, employees have to pay for their medical expenses first, then apply for reimbursement after.  

To qualify for reimbursements, employees must submit proof of costs incurred. Some of the healthcare expenses covered by HRAs include doctor’s office visits, wellness exams, insurance premiums, copays, prescription medications, psychiatric care, and medical care-related transportation costs. 

Small business owners can set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) – a type of HRA meant specifically for businesses with fewer than 50 employees and no existing group insurance policy. Single employees can receive up to $5,250 in reimbursements, while those with families can get up to $10,600. 

4. Consider A Membership With A Healthcare Sharing Program

As already mentioned, another non-insurance approach you can try is a medical cost-sharing or healthcare sharing program. Medical cost-sharing programs are organizations that are composed of members who share common religious and/or ethical beliefs and help each other take care of one another’s healthcare costs.

Each member contributes a predetermined monthly “share” amount, which can be used to fund a participating member’s future medical bills. In most health sharing programs, you also have an “annual unshared amount” that acts like a deductible account. Depending on the community you join, you may or may not have to pay an annual membership fee.

Sedera Health is one such medical cost-sharing community. This Austin, Texas-based medical cost-sharing group is a community of individuals and families who provide support for each other in both their healthcare needs and in leading healthy lifestyles. Not only do they help participants shoulder unexpected medical bills, but they also provide options for direct primary care doctors and offer rewards to members who engage in healthy activities. 

Compared to the regular life insurance plans you can find on the SHOP marketplace, membership contributions at Sedera aren’t as steep. If you go on SHOP, the monthly cost for someone aged 35 can range from $275 to $700. At Sedera, an individual can make a monthly membership contribution of just $158 to $294.

The Bottom Line

Managing healthcare as a small business owner can be tricky, especially as health insurance grows more and more expensive. However, your employee health plan doesn’t have to be a money pit. With the tips above, you can make sure that your people and your business can weather any storm. Interested in medical cost-sharing for your small business?

If you want to get started with a reliable healthcare sharing program, visit EmmerScale’s sign up page today.

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