The issue of how businesses, regardless of size, plan to approach the issuing of health insurance or other types of coverage to their employees under the Patient Protection and Affordable Care Act has been at the front of many entrepreneurs’ minds in the last year or more. Now, it seems that many are choosing to explore their options when it comes to things like defined contribution plans.
These vary from standard health insurance options in a very specific way: While traditional coverage plans that have long been offered by employers carry not only the cost of the premiums but also other expenses, a defined contribution plan means that workers will only receive a certain amount of money per month to put toward their care, according to a report from the Waterloo-Cedar Falls Courier. These may be particularly attractive to small business owners in particular because it will allow them to help their employees with coverage costs, but also set the amounts they’ll pay for certain types of employees (executives, full-time, part-time, and so on) at different levels, which may help them to save money in the long run. Workers can also be given the option to receive other types of coverage in addition to these funds.
Freeing up some time
Another reason this kind of health plan is gaining in popularity among small businesses is that it simply takes a long time for owners to sift through the many types of traditional heath insurance plans available to them to find the type of coverage that will work best for all their employees at once, the report said. This could lead to good overall comprehensive care, but when specific employees have unique health issues arise, they might find their plans lacking. With a defined contribution plan, those issues can be less prevalent because people will be able to buy the exact kind of coverage they need.
“Why do I go through all the effort and stress and spend all that time choosing medical insurance for my employees plus pay most of their premiums, and I still have six out of 10 employees come into my office and grumble about their benefits?” one small business owner told the newspaper.
Entrepreneurs worried about their bottom lines under the new health care laws might want to consider the ways in which they’re spending money on other types of small business insurance. Cutting costs for liability insurance, for instance, could trim significant fat from an annual budget.