Sacramento – Health Insurance & Employee Benefits

How Sacramento Business Owners Can Retain the Best Employees

With more people choosing to live in Sacramento due to its wealth of opportunities and its affordability, it should be easy for businesses to find good workers. But as employers large and small already know, finding and keeping the right workers in Sacramento is easier said than done. One thing that’s proven to help is to offer employees suitable benefits packages.

Do you need to offer benefits?

Small-business owners in Sacramento may be questioning if it’s worth offering employee benefits, especially at businesses so small that they don’t even have a dedicated human resources specialist. While companies with fewer than 50 employees are not required to offer benefits, it’s clear that doing so leads to a happier and more productive workplace. By offering benefits, businesses can also recruit Sacramento workers with better skills and more experience. Additionally, some small businesses can qualify for tax credits that significantly reduce the overall costs of employee benefits.

Next steps

Once you decide to offer benefits, the next step is to find a company that offers a package that meets your workers’ needs and your budget. It takes products from many different institutions to piece together comprehensive benefits packages (health insurance, retirement savings, disability insurance, etc.). A small-business owner in Sacramento could be easily overwhelmed by the amount of research necessary to find the best benefits for their employees.

Using an employee benefits broker

That’s why many business owners in Sacramento turn to health insurance brokers. Brokers can help independent contractors and businesses make sense of the insurance landscape and find the benefits packages that work best for their needs. A top-rated insurance broker will have deep knowledge of the breadth of products offered by the insurance industry. The best brokers will take the time to understand the employees’ needs and will make themselves easily available to answer questions.

One Way for Sacramento Small Businesses to Save on Healthcare Costs

Small-business owners may wish to consider Section 125 Premium-Only-Plans (POP) to reduce their tax burden and that of their employees. Section 125 of the Internal Revenue Service code defines how businesses can legally turn a taxable benefit (salary) into a non-taxable benefit (health insurance).

When offering health insurance, most companies require employees to pay a percentage of the premium when they enroll in the healthcare plan. While employers always pay insurance premiums before taxes, a Section 125 POP gives a similar benefit to employees. Under this arrangement, insurance premiums are taken from paychecks before taxes.

A Section 125 POP has clear advantages for the employee. Paying health insurance premiums before taxes reduces the individual’s tax burden. These plans benefit employers, too, as businesses then pay less in payroll taxes.

Small-businesses owners should be aware that a Section 125 POP is set up separately from an insurance plan; your broker should be able to help you submit the proper filings with the IRS. Your employees will need to have documentation of the company’s participation in a Section 125-POP to receive benefits.

Insurance Brokers vs. Insurance Agents

Employers and individuals looking for health insurance in the Sacramento area have the choice of working with either an insurance broker or an insurance agent. Below, we’ll break down the differences between the two so that you can start searching for the best insurance plan for yourself or your employees.

Insurance Brokers

Insurance brokers have relationships with many different insurance companies. That means they aren’t focused on promoting one company’s plan but rather will take the time to assess your needs and your budget to find the best insurance policy fit. Brokers tend to have a broad understanding of the range of policies available to customers. With their in-depth knowledge, brokers can even help customize a policy to meet your needs.

Keep in mind that brokers do work for commission. While brokers will work to get you the best deal, they may introduce you to policy extras that you don’t really need. For this reason, customers need to set and stick to a budget when choosing a policy.

Insurance Agents

The typical insurance agent is called a “captive agent,” which means he or she works for a specific insurance company. These agents will have more in-depth knowledge about the company and the policies available than someone from the outside. However, they only will offer you policies from the company they represent. “Independent agents” offer policies from multiple agencies; however, the insurance companies don’t always make their full range of policies available through independent agents. As with brokers, agents work for commission and are therefore incentivized to get you to sign for as much coverage as possible. Be clear about your needs and budgets when meeting with an insurance agent.

Employee Benefits: Terms to Know

Group health insurance: Group health insurance is a common type of health insurance coverage available through employers. Generally, these plans are often set up through the employer and are offered at a discount to cover all employees and their dependents.

Individual insurance plans: These plans are purchased by individuals (not employers) to cover the policyholder and their family. They are often purchased through the assistance of an insurance agent or broker.

Deductible: This is the dollar amount that the policyholder is required to pay before the insurance policy will begin covering all expenses. Nearly all insurance policies require a deductible.

Co-payment: A set charge that a policyholder must pay when accessing medical services. These fees are set in advance by the insurance company.

Flexible spending account (FSA): These are special accounts that employees can use to pay for medical expenses not covered by insurance, such as copays, physical therapy, medical testing or prescriptions. The money in the FSA is drawn from employees’ paychecks before taxes. Though rules vary, participants generally must use the money in the account within a given year, or else it is forfeited.

Health savings account (HSA): Similar to an FSA, these are also savings accounts dedicated to paying for approved medical expenses. As with the FSA, employees’ wages go into these accounts before taxes. One notable difference between an FSA and HSA is that employees can keep any unused funds at the end of the year. HSAs are only available to employees participating in high-deductible healthcare plans.

HMO plan: HMO stands for “health maintenance organization.” Individuals with this type of health insurance plan choose a primary care specialist, who will refer them to a list of preferred medical specialists when necessary. With exceptions for emergencies, the plan will not cover medical care from providers not part of this network.

Out-of-network provider: These are doctors or hospitals who do not have a contractual relationship with your insurance provider. There is no prohibition against using an out-of-network provider, but your insurance policy will not cover the costs and you will likely be charged more.

Short-term disability insurance: These plans will pay a predetermined portion of your income if you need to take a leave of absence from work for health-related reasons, such as pregnancy, illness or surgical recovery. Plans generally cover a few weeks to several months, depending on the policy.

Long-term disability insurance: These policies cover employees who are unable to work for an extended period due to illness or injury. The policy will pay a percentage of income (50%–70%, for example) for a predetermined period of time (2–10 years, for example). The benefits generally begin once short-term disability coverage has expired.