A veterinary clinic's guide to health benefits

There are a number of challenges associated with owning a small veterinary clinic, from constant demands on the owner’s time to never-ending budget constraints.

Two of the biggest challenges for small clinics are health care costs and staff recruitment and retention. Both can be a tremendous burden on a veterinarian’s time and budget.

Health care costs for veterinary clinics

Many small and medium veterinary clinics can’t offer group health insurance coverage due to rising costs and restrictive minimum contribution and participation requirements. Fortunately, there are other options out there.

Many small businesses, vet offices included, are turning to something called a health reimbursement arrangement (HRA). Using an HRA, the clinic can offer their staff a tax-free allowance, staff can purchase individual insurance policies and other medical expenses, and the business can reimburse them up to their allowance limit.

See our section on health insurance options for more information on these reimbursement benefits.

Vet clinic employee recruitment and retention

Employee recruitment and retention is important for all businesses, but for small businesses, it's particularly vital—and particularly difficult. It's tough to compete against big businesses with much bigger budgets.

Some clinics just ignore the problem in favor of saving the money they would've spent. Unfortunately, that leads to turnover, and turnover is more expensive than most companies think it is.

One study says that replacing an employee costs 6 to 9 months' worth of that employee's salary.

Veterinary clinics can't afford not to offer benefits if it leads to high turnover. After wages, health benefits are the most important factor in determining whether someone will accept a job.

Fortunately, small businesses now have new health plan options that can fit their budgets and still provide value to a new hire—or a tenured vet tech.

Let's dive into those options.

Option 1: The QSEHRA

With a qualified small employer HRA (QSEHRA), vet clinics with fewer than 50 full-time employees can set an allowance for their staff to use toward health benefits. The clinic then reimburses them for their premiums and other qualified medical expenses.

Here's how it works:

1. The clinic sets the allowance.
2. Employees make purchases.
3. Employees submit proof of expenses.
4. The clinic reviews and then reimburses the expenses.

Option 2: The ICHRA

The individual coverage HRA (ICHRA) is a new HRA option first available in 2020. A close cousin of the QSEHRA, the ICHRA works in much the same way but has a few key differences.

• First, the ICHRA is available to businesses of any size, not just those under 50.
• Second, the ICHRA allows businesses to vary allowances by employee criteria, such as full-time or part-time status, salaried vs. non-salaried status, geographic location, and more.

For more on the differences between the ICHRA and the QSEHRA, click here.

Option 3: Traditional group health insurance

Vet clinics always have the option of going with group health insurance, and it's certainly what most new hires expect when they hear "health benefits."

However, especially for smaller clinics, there are often rigid budget constraints, and they often have trouble meeting the strict minimum participation criteria group benefits often require.

Businesses can shift more of the cost burden onto employees, but then those employees often struggle to pay the increased premium costs.

If you still want to offer traditional group coverage, you can supplement it with a group coverage HRA (GCHRA).