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As a small business owner, every dollar counts when it comes to expenses. Small expenses add up in the long run and can make or break your business if you aren't vigilant. If you are hoping to cut costs, look to employee benefits first. Although it may not seem obvious, this is one area where it is incredibly easy to save money by making just a few small changes. Try some of the following tips to help you reduce employee benefit costs and save money for your small business.
1. Research Group Discounts
Group discounts are a great way to cut employee benefit costs. When it is time to shop for a new health insurance plan, do your research. There are companies that offer these types of plans specifically for small businesses. You may want to outsource this task to an third-party. There are companies that can specifically help you find the best group rate for your business. Generally, this entails the third-party provider combining the purchasing power of all their clients so they have access to premium plans at lower rates.
2. Read the Fine Print
Renewal rates can really impact the cost of employee benefits. You may have a great rate one year and then find that your rate is being increased the next year. Always read the literature that you are given and ask the important questions before signing on to an insurance plan. Being well-versed in your plan can save you lots of money in the long run. Look at it like another aspect of your job as a business owner and schedule time to review important information about your benefits plan.
3. Utilize HSAs
HSA stands for "Health Savings Account." This type of account allows employees to put aside money for the health care expenses. They can then use their HSA card when they are paying for medications, purchasing a thrive patch, doctor visits or hospital stays. Money saved in an HSA is pre-tax, so your employees are getting more from their dollar than they otherwise might. HSA money rolls over from year to year, so your employees are never penalized for not spending the entire amount. Best of all, health insurance plans that feature an HSA often come with lower premiums, which means that both you and your employees benefit from this system.
4. Avoid Over-Insuring
Insurers analyze your company from year to year, relying on your past claims history to decide how much to charge you for health benefits. While your trends may be relatively stable for several years in a row, you may experience years where several of your employees choose a high-cost plan. This can lead to much higher costs for you and your business. This is where research comes into play. Know what your employees want and need. Choose a plan based upon that information, rather than a standardized plan that may not meet the needs of your workforce. You may also want to get quotes from different insurance companies every few years to make sure you are still getting the best rates.
5. Lower Your Administrative Costs
Benefits administration is one of the most expensive components of employee benefits. Automation is one of the key ways to cut benefits administration costs. Make sure your employees can access an online portal so that they can enroll themselves in benefit packages. Consider outsourcing your benefits management to another company, if possible. They can answer complicated benefits-related questions, as well as ensure that you are paying for only the benefits that you need.
Owning a small business can be financially challenging, but there are ways to actually save money which can then be re-routed to other aspects of your company. Look at your employee benefit plan and consider using a few of these tips to cut costs. You'll see gains in the long run while still offering the benefits plan that your employees rely upon.