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Employer Contributions in the Small Business World

Strengthen your business by investing in your most important resource: your employees

Cautious workers may be afraid to work for a small company. While the small business atmosphere can be quite cozy in comparison to that of a larger corporation, in the mind of a weary and sometimes disenchanted employee, that comfort level is not good enough. Traditionally, larger companies have lured quality workers away from small businesses simply by offering a better benefit package than the smaller companies could afford. Today, health insurance has become the big-ticket item. A good health insurance plan attracts the best workers. Considering that less than half of all small businesses currently offer health insurance, it's no wonder that it has become increasingly difficult for small businesses to thrive.

In peace of mind alone, health insurance pays for itself long before the small business owner would ever notice a financial dent. Workers want security, but not just in their jobs. They want to know that if something bad happens to them, they will be able to rebound. Health insurance helps take care of the financial expense that often comes along with "something bad." Unfortunately, within the entrepreneurial spirit that results in a successful small business, is also a naïve idealism that makes the small business owner believe that money will pour from the clouds, taking care of business expenses, humanitarian pursuits and employee satisfaction all in one shot.

While the rose-colored glasses may need some cleaning, modern insurance carriers are offering the small business owner an opportunity to keep a cheery view of the world. The "defined contribution" plan is a relatively new and immensely popular health insurance plan that allows an employer to set aside a particular amount of money each year, say one or two thousand dollars, for each employee for medical expenses. If the employee stays healthy, the money builds until it is needed. Once an employee uses the money in the fund, he must pay a predetermined deductible out-of-pocket before company coverage (a group PPO plan, for example) takes over.

Another new addition to small business health insurance is the employee-elect plan. In this plan, employers pay for an inexpensive HMO plan and allow their employees to "buy up" to a more expensive PPO plan; essentially, an employee pays the difference to receive more flexible coverage.

As large insurance carriers begin to recognize the importance of the small business and its role in the financial world, health insurance will become not merely the icing on the cake, but truly a standard benefit in the small business package.

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