Health insurance options for retailers

As a retailer, you know that running a business can be challenging. From managing inventory to providing exceptional customer service, countless tasks require your attention. However, one aspect of running a retail business that you shouldn't overlook is providing health insurance coverage to your employees.

Health benefits are highly sought-after by employees and job candidates. Our 2024 Employee Benefits Survey Report found that 92% of employees value health benefits, including health insurance. Having the right health benefits in place can provide peace of mind for you and your employees. It can also boost your recruitment and retention of top talent.

In this article, we'll go over a few different health benefits retailers can offer. By understanding your options below, you can make an informed decision for your employees' well-being and your bottom line.

Group health insurance plans

Under the Affordable Care Act (ACA), employers with 50 or more full-time equivalent employees (FTEs) must provide health insurance coverage to at least 95% of their full-time employees. For this reason, many large retail stores offer group health insurance plans in order to satisfy the employer mandate.

According to KFF¹, almost 159 million people have employer-sponsored insurance. These plans provide coverage for employees and their dependents. You can purchase a group health plan through insurance brokers or by working directly with insurance companies. Group plans offer a range of coverage options, including medical, dental, and vision benefits.

On the downside, this type of health insurance is expensive. Based on data from KFF, the average annual cost of employer-sponsored health insurance premiums per employee in 2022 was $22,463 for family coverage and $7,911 for single coverage.

Here are some common types of plans:

• Preferred provider organization (PPO): Under a PPO plan, employees can use a network of preferred doctors and hospitals to receive medical care at a negotiated or discounted rate. Choosing a primary care provider (PCP) isn’t mandatory, and employees can see any doctor within their network.
• Health maintenance organization (HMO): An HMO plan typically requires employees to select a primary care doctor and obtain a referral from their PCP in order to see a specialist.
• Point of service (POS): With a POS plan, employees must choose a primary care physician from the plan's network of healthcare providers, similar to an HMO. Typically, services provided by the PCP, such as routine care or preventive services, are not subject to the deductible.
• Exclusive provider organization (EPO): EPO plans are also like HMOs. They have network doctors and require members to use them, except in emergencies. Members have a PCP who refers them to in-network specialists. Members also have to pay small copayments and possibly a deductible.

Individual health insurance plans

For retailers who operate as sole proprietors or have a small number of employees, having employees purchase individual health plans can be a viable option. Individual coverage is often cheaper than group coverage in many states, including Colorado, Georgia, Minnesota, New York, and Ohio.

Employees can purchase these plans directly from insurance companies or the Health Insurance Marketplace. They offer coverage for the individual and their dependents. With an individual insurance plan, employees can choose the coverage that works best for them.

However, having your employees purchase individual plans isn’t an employer-provided benefit. It also doesn’t satisfy the ACA’s employer mandate for organizations with 50 or more FTEs. Thankfully, there’s a way you can take advantage of individual plans while providing a compliant health benefit.

Health reimbursement arrangements

Health reimbursement arrangements (HRAs) are cost-effective alternatives to health insurance. They're employer-funded accounts that reimburse employees for eligible medical expenses. Depending on the type of HRA you offer, this can include individual health insurance premiums. With an HRA, retailers can set aside tax-free money to reimburse employees for their healthcare expenses, including deductibles, copayments, and qualifying out-of-pocket costs.

HRAs cover more than 200 expenses, including:

• Emergency services
• Urgent care
• Preventive care
• Hospitalization expenses
• Physical exams
• Physician office visits
• Chiropractic care
• Over-the-counter medication
• Prescriptions
• Flu shots

HRAs can be a flexible option for retailers. You can customize them to meet specific needs and budget constraints.

Here are the three popular HRAs you can offer through PeopleKeep:

• The qualified small employer HRA (QSEHRA): QSEHRAs are for organizations with fewer than 50 FTEs. This is the perfect option for small retailers looking to offer a health benefit they can afford. Employees purchase their own policy through the Health Insurance Marketplace, and employers reimburse them for monthly premiums and out-of-pocket expenses, including dental insurance premiums.
• The individual coverage HRA (ICHRA): ICHRAs work for organizations of all sizes. Employers can offer different employees different allowance amounts by dividing them into separate classes. Plus, employees can choose the individual health insurance that works best for them rather than getting stuck with a group plan they didn't pick. An ICHRA is an excellent option for any retailer looking to offer an inclusive and budget-friendly benefit.
• The group coverage HRA (GCHRA): GCHRAs, also known as integrated HRAs, supplement a group health plan by providing additional coverage for out-of-pocket costs not fully covered by the group health plan. They’re beneficial for employers that want to enhance their existing group policy in order to attract and retain top talent.

One of the biggest benefits of an HRA is that you can offer them to all your employees, whether they work full- or part-time. With an ICHRA or GCHRA, you can customize eligibility and allowances with employee classes for added flexibility.

With high turnover in the retail industry, an HRA can help you retain your employees without the expense of a group plan. Plus, HRAs are employer-owned. That means you keep any unused funds at the end of the plan year or when your employees leave your organization.

HRAs are a truly versatile solution for retailers no matter their size, location, or budget.

Health stipends

A health stipend is a set amount of money that retailers can allocate to each employee on a regular basis. They can use their health stipends for various healthcare-related expenses, such as co-pays, deductibles, prescription medications, and even wellness services or gym memberships if the employer allows it. They provide employees with the flexibility and freedom to spend the money on medical expenses or products that best suit their individual needs.

While stipends are the most flexible option for retailers, they don’t satisfy the ACA’s employer mandate. You also can’t require employees to submit receipts for any expenses listed in IRS Publication 502 or for proof of insurance.

Health savings accounts

Health savings accounts (HSAs) are another option for retailers looking to provide health benefits. HSAs are tax-advantaged savings accounts employees can use to pay for eligible medical expenses. You can pair HSAs with high deductible health plans (HDHPs), which have lower monthly premiums but higher deductibles. Employees can contribute to their HSA through pre-tax payroll deductions. HSAs can be a valuable tool for retailers who want to offer their employees a way to save for healthcare costs while providing a more affordable insurance option.

Association health plans

Association health plans (AHPs) allow small businesses within the same industry or geographical area to band together to purchase a health plan. By joining forces, retailers can benefit from the purchasing power of a larger group, potentially gaining access to more affordable insurance options. AHPs can help retailers provide comprehensive coverage to their employees while also enjoying the advantages of being part of a larger pool of insured individuals. In addition, AHPs include compatibility with HSAs and coverage for contract and freelance employees, including 1099 employees, self-employed individuals, and sole proprietors.

AHPs aren't obligated to adhere to certain rules of the ACA, such as providing essential health benefits or paying specific fees required by individual health insurance. However, they can meet the criteria for minimum essential coverage (MEC) under the ACA.

Wellness programs

Implementing wellness programs can be a cost-effective way to promote employee health and well-being. These programs can include gym memberships, smoking cessation programs, mental health support, and preventive care services. Investing in employee wellness can reduce healthcare costs in the long run by preventing or managing minor conditions and chronic conditions.

You can also offer your employees a wellness stipend. A taxable wellness stipend is a set amount of money you offer your employees for their wellness-related expenses.

Conclusion

When considering the different health benefit options for your retail business, it's important to evaluate the needs of your employees, budgetary constraints, and the level of coverage desired. Consulting with an insurance professional specializing in small business health insurance can help you navigate through the various options and find the best fit for your specific needs.

Remember, investing in your employees’ health and well-being isn’t only beneficial for them but can also contribute to the overall success of your retail store.

If you’re ready to offer personalized health benefits to your employees, PeopleKeep can help. Our HRA administration software makes it easy to set up and manage your health benefits in minutes each month.

Ready to offer a customized health benefit to your employees? Schedule a call with a personalized benefits advisor now!

1. https://www.kff.org/report-section/ehbs-2022-summary-of-findings/
2. http://analytics.ideonapi.com/veristat/hra/lowest-premiums-map/2023/