The following is an excerpt from our free resource, A Step-by-Step Guide to Individual Health Insurance for Employees. If you'd like to download the full resource, click here.
As a small business owner, you want to provide the best health insurance to employees. And yet, traditional group health insurance has become too expensive and only 54% of all small and medium-sized employers offer group health insurance today. As such, small businesses nationwide are switching employees to individual health insurance.
Sounds great, right? But how do you actually make the switch? Here are four easy steps to follow to switch employees to individual health insurance.
Step 1: Cancel your group health insurance policy (if you offer one)
To cancel your policy, call a customer representative with the insurance company to confirm the exact required steps. With most group health insurance plans you can cancel the policy at any point during the year. While many carriers “request” 30 days’ notice, this is not always required.
Step 2: Set up a reimbursement program
If you would like to contribute to employees’ health insurance expenses, the next step is to set up a reimbursement program.
There are two main options for reimbursing employees for their individual health insurance premiums:
A taxable health insurance stipend, or
A formal reimbursement plan (pre-tax and post-tax options are available).
For more information on these two approaches, see: Health Insurance Stipend vs. A Reimbursement Plan - Which is Better?
Step 3: Educate employees
Next, educate employees. Employees are happiest when they understand the “what,” “how,” and “why” of your health benefits program.Educate employees on:
How individual health insurance and the reimbursement program works
Why the company has decided to offer health benefits in this way (remember, it is better for employees too!)
The benefits of individual health insurance such as plan choice, flexibility, and cost-savings
How to purchase individual health insurance for themselves and their family
How to request reimbursement
Important dates and deadlines
Tip: This is one of the most important steps you take as you adopt individual health insurance for employees.
Step 4: Provide employees resources to help select a plan
Applying for individual health insurance has never been easier. For some employees, however, this is a new experience.
Work with your healthcare reimbursement software provider or a licensed broker to help employees select and purchase plans. You can also provide information about the Health Insurance Marketplace in your state (see this directory of Marketplace Websites).
Providing resources will help employees choose plans that best fit their individual or family needs, such as keeping the same network of providers and balancing their premium with out-of-pocket costs. And, it highlights that you care about employees’ healthcare.
Questions about switching employees to individual health insurance? Leave a comment below.