Affordable Healthcare Options for Your Business: Beyond Traditional Insurance

What are the benefits of offering healthcare alternatives?

According to the United States Census Bureau’s Health Insurance Coverage in the United States: 2023 report, more than half of the U.S. population is covered by employment-based health insurance.

To remain competitive in recruiting, consider including healthcare insurance in your company’s benefits package and offer affordable health insurance alternatives that give employees options.

Traditional health insurance includes managed care plans such as health maintenance organizations (HMO) and preferred provider organizations (PPO).

HMOs offer various healthcare services and require participants to use providers within their network. PPOs also provide comprehensive healthcare services but allow participants to visit non-network providers for an additional cost.

Under these plans, a participating employee (or business) pays insurance premiums, co-pays, and a range of deductibles. To alleviate the financial burden this represents for some employees, supplement your traditional healthcare benefits with affordable options, which help:

• Attract and retain skilled – and dedicated – employees. Employees appreciate employers that provide a range of options that cater to employees’ healthcare needs and financial wellbeing.
• Boost workers’ long-term health and wellness. Healthcare benefits and insurance plans that offer no- or low-cost preventative care and wellness options, such as free annual exams, help boost employees’ long-term health, equating to a reduction in sick leave and medical costs associated with serious illnesses.
• Reduce business costs. The costs associated with affordable healthcare alternatives are often lower than those associated with traditional plans, so businesses can better control benefits costs.
• Take advantage of tax breaks. A business can deduct 100% of its premiums when offering employees a qualifying group health insurance plan. It could also cut payroll taxes, according to The Hartford’s “Tax Benefits of Company Sponsored Health Insurance Plans.”
• Comply with the Affordable Care Act (ACA). Businesses with 50 or more full-time and full-time equivalent employees are obligated by the Affordable Care Act and associated laws to fulfill specific minimum requirements outlined in the ACA or make a tax payment referred to as the employer-shared responsibility payment (ESRP). That tax payment (or penalty) is $2,970 per full-time employee, after excluding the first 30 full-time employees, in 2024.

6 Affordable Healthcare Alternatives

As a business owner, you want to offer valuable health benefits that help you attract and retain quality employees – while minimizing the impact on your business's bottom line.

To help you narrow in on what might be best for your organization, here are six of the best health insurance alternatives to consider:

1. High Deductible Health Plan (HDHP) with a Health Savings Account (HSA)

A high deductible health plan (HDHP) has higher annual deductibles than traditional plans but lower monthly premiums for covered services for employers and employees. Participants must meet the yearly deductible before the plan covers eligible expenses (except for preventive care).

Employees enrolled in eligible HDHPs can further manage medical expenses with a health savings account (HSA), which allows employees to set aside money on a pre-tax basis to pay for deductibles, copayments, coinsurance, and other qualified medical expenses, as defined by tax law.

2. Healthcare Flexible Spending Account (FSA)

A healthcare flexible spending account (FSA) is a benefit plan that allows employees to set aside pre-tax dollars to pay for eligible healthcare expenses. FSAs do not require participation in a high-deductible health plan. Typically, employees must use FSA funds within the plan year.

3. Health Reimbursement Arrangement (HRA)

A Health Reimbursement Arrangement (HRA) is an employer-funded group health plan that reimburses employees with tax-free dollars for qualifying medical expenses or insurance premiums up to a fixed dollar amount per year. For certain types of HRAs, employees must enroll in a health plan to use the HRA funds. Because employers have discretion regarding how much they want to contribute, they are better able to control costs. The plans are tax-deductible for the employer, and reimbursements are tax-free when an employee files an eligible claim.

4. Telehealth Services

Telehealth services (or virtual healthcare) are provided at a low monthly cost by a professional at a remote location via computer, tablet, or smartphone, including video chat and remote monitoring.

According to the Harvard Business Review, employers that offer telehealth services through employee health insurance plans realize long-term savings in the following ways:

• Patients make fewer unnecessary trips to hospital emergency rooms, which often incur medical bills several times the cost of a telehealth visit.
• Worker productivity increases because virtual doctor visits are less time-consuming.
• Employees have improved access to specialists and affordable, high-quality physical and mental healthcare. It's estimated that if 30-40% of in-person specialist appointments were replaced with telehealth consults, patients would miss fewer workdays and receive faster and more effective care.

5. Employee Assistance Program (EAP)

An employee assistance program (EAP) provides employees with confidential access to outside counselors, resources, and referrals—helping them address personal and work-related issues affecting their job performance or mental health and wellbeing. Employers typically include EAPs in benefits packages at no cost to employees, and services are also available to employees' immediate family members and others living in their homes.

6. Professional Employer Organization (PEO) Plan

Businesses can enter into a co-employment relationship with a professional employer organization (PEO) to access quality healthcare benefits at lower negotiated rates than a business could access if they bought directly from an insurance company.

The U.S. Chamber of Commerce's "How to Offer Health Insurance Using a PEO" states that businesses reap several benefits when partnering with a PEO, including:

• Lower health plan premiums: PEOs have buying power and relationships with multiple insurance carriers, giving small businesses access to affordable medical insurance plans with comprehensive coverage.
• Reduced overhead costs: PEO benefits administration decreases internal paperwork and unifies information in a central tech platform.
• Better employee experiences: Mobile apps, dedicated support, and enrollment tools help workers compare PEO health plans and rates, see prescription and provider coverage options, and add family members.
• Risk mitigation: PEOs track state and federal healthcare regulations and can provide guidance on local laws.

When should your business consider offering alternative healthcare benefits?

If you are deciding whether to offer alternatives to employer health insurance, first consider how healthcare costs are impacting employees and employers alike, according to the Kaiser Family Foundation’s 2023 Employer Health Benefits Survey:

• The financial burden on employees is significant, with the average annual premium for employer-sponsored health insurance in 2023 being $8,435 for single coverage and $23,968 for family coverage. On average, covered workers contributed 17% of the premium for single coverage and 29% for family coverage, and employers covered the rest.
• Ninety percent of workers with single coverage have a general annual deductible that must be met before most services are paid for by the plan. The average deductible amount (in 2023) for workers with single coverage and a general annual deductible was $1,735. The average deductible for covered workers is much higher at small firms than at large firms ($2,434 vs. $1,478).

While some business owners might consider it cost-prohibitive to provide health insurance (if not required by federal law), not doing so could result in long-term impacts on employee recruitment, retention, and engagement metrics. And offering health insurance alternatives can provide relief from the cost burden and lead to a positive impact on your business’s bottom line in due time.

How to Offer Affordable Healthcare Alternatives to Employees

On average, larger companies have an advantage when procuring medical insurance coverage. The more people an organization has in its employee pool, the more power it has when negotiating insurance rates with carriers. For this reason, as a small or mid-sized company, you may have faced challenges providing health insurance alternatives for employees.

But there is power in numbers, and partnering with a PEO, like G&A Partners, allows you to take advantage of the buying power derived from pooling 100,000-plus employees from thousands of small- to mid-sized client companies to access affordable rates on Fortune 500-level medical benefits and health insurance alternatives.

Here are the options and services available to your employees through a PEO:

• A range of health insurance plan options to choose from. Whether it's a PPO, HMO, or HDHP plan, they can select what best suits their and their family's needs.
• Health savings account (HSA), healthcare flexible spending accounts (FSAs) and health reimbursement arrangements (HRA) that provide your company and employees a way to manage rising medical costs.
• Employee assistance programs that provide additional health, wellness, and support resources, ensuring your employees feel supported in all aspects of their health.
• An online benefits enrollment and a self-service portal that gives your employees online access to the open enrollment system, digital access to their personal benefits portal where they can find in-network providers and specialists in their area, and educational resources explaining your company's benefits offerings and plan comparisons.
• A wide range of ancillary benefits – including dental, vision, disability and life insurance, pet insurance, and much more.