Small law firms are facing huge rate increases with their group health insurance policies this year. Since small law firms may have limited capital, the cost of traditional group health insurance is becoming a significant challenge. In addition, the firm may not have enough employees to meet the minimum participation requirements.
Nonetheless, healthcare benefits are an important part of recruiting and retaining the best partners, paralegals, and receptionists. While many law firms simply pay the high costs of group health insurance or forgo offering health insurance, this leaves the employees at risk of incurring large medical bills in the case of an accident or expensive medical procedure.
A more ideal solution is for small law firms to send their employees to the individual health insurance market. The firm can still help their employees with their individual health insurance costs while remaining within the confines of their budget. Here’s why employer-funded individual health insurance is an ideal solution for small law firms.
Why Individual Health Insurance is Ideal for Small Law Firms
Employer-funded individual health insurance is ideal for small law firms because the solution allows them to offer healthcare benefits for employee recruiting and retention, while still controlling their benefits costs. The solution is affordable, 100 percent paperless, and flexible enough to fit the needs of a busy law firm. In addition, by utilizing employee classes, the practice can set up different healthcare allowances for the different employee roles. Here are the benefits of individual health insurance and why they fit well with small law firms:
1. Controllable Costs: Being able to set, control, and predict all health benefits costs is revolutionary for many small law firms. The firm is not tied to minimum contribution requirements which can rise unpredictably year to year. Reimbursing employees’ individual health insurance gives the law firm controllable costs by:
Defining their budget by setting any contribution amount to employees’ healthcare
Giving employees access to monthly healthcare allowances
Allocating different allowances to partners, paralegals, receptionists, and office managers.
Allowing employees to select their own individual health insurance policies
Reimbursing employees only for eligible health insurance premiums up to the amount in their healthcare allowance
2. More Time for with Clients: With a credible reimbursement software provider, the reimbursements take less than 5 minutes per month to administer online. Some small law firms consider grossing up salaries for their employees’ health insurance without a formal plan or compliant software. However, remaining in compliance with federal regulations and health reform can be costly, time-consuming, and an administrative hassle.
A credible reimbursement software provider eliminates the time, costs, and administrative hassle of offering health benefits. Firms that select a reimbursement software provider can expect to:
Spend less than five minutes per month administering their reimbursement plan
Have access to their reimbursement plan online 24/7
Incorporate reimbursements with their existing payroll system and HR process
3. Compliance: Small law firms have been quick to adopt employer-funded individual health insurance because they understand the compliance reasons for using a formal plan (such as a Section 105 plan) and the importance of complying with ACA, ERISA, HIPAA, and IRS.
Why Individual Health Insurance Works Well for Employees of Small Law Firms
1. Familiarity with Compliance and Tax Laws: The staff at law firms are comfortable with adjusting their behavior to take advantage of compliance rules and tax rules.
2. Employee Choice: Individual health insurance offers more choice and control to employees by allowing them to choose a plan that fits their own needs, including coverage level and network. Employees can choose their own plans to work with their budget. These plans can be customized to individual circumstances and age.
For example, if a young employee is relatively healthy and on a tight budget, a plan with a lower premium and higher deductible may be the right choice. On the other hand, for employees with more healthcare needs, a plan with a higher premium and lower deductible may be the better plan.
3. Lower Costs: Individual health insurance costs up to 60% less than group health insurance coverage. Additionally, employees may qualify for premium tax credits, depending upon their income level, household size, and eligibility for other government subsidized programs.