Hey all, my wife and I both are hands-on small business owners, each running a different business. She runs a small pet grooming business where we hired a couple of great people that she used to work with.
We are currently pretty maxed out on pay, where these employees make the equivalent of 50% of the revenue they bring in (this is before payroll taxes and all of the other fixed business expenses), plus their tips of course. This is pretty standard industry pay.
They currently have no health insurance. My wife and I have three kids and therefore qualify for some help through ACA (Obamacare) but they are single and likely just above the threshold.
We care about their wellbeing of course and wish we could offer something to help but not sure how it would work, as we don’t really have any room to add more expenses to payroll as it stands and have the business remain healthy. Any ideas? What are people doing in this situation?
We are in Oregon.
Thank you!
Basically, if you have fewer than (I think) 50 employees you are not required to offer insurance. Group healthcare is INSANELY expensive. Our rates have gone up something like 40% in the last 4 years. I’m shouldering the bulk of the increase and it’s substantial. In my industry, it’s hard to hire top tier employees if I don’t offer group coverage. I consider it a cost of doing business.
That said, your margins are razor thin. Here is a theoretical - you provide group coverage, you hire an employee with a serious long term medical condition, boom your rates go up 50% since that person is 15% of your entire staff. You now can’t even leave your carrier for new coverage since everyone will decline you. You either pull the rug under everyone, or dance around the situation with this happening right after hiring someone with a serious medical condition. In that situation you would’ve been far better off giving everyone a pay rate increase to get their own short term health plans and term life. Then you aren’t closing your doors due to hiring someone that turned your group plan upside down.
My suggestion, first talk to your general business attorney and get some advice. Ideally someone at a small firm who understands how difficult this is to navigate. Also find out what you legally can and cannot say to avoid risk of being sued over it. And ultimately increase pay, ideally you can explain you looked at group and there’s no way it’s financially feasible but you’re increasing pay 5-10% as long as business is good. That it isn’t completely separate from reviews. And here are links to group coverage/aca/etc. I personally use a broker because I hate HR trying to advise staff on what to do. I don’t want them to tell someone how to gets their meds covered, or that they will be covered, then it blow up and have an employee blaming my firm.
Until I started offering group I had no idea how complex it was and how much rates fluctuate. To give you a comparison, I am a family of four. When I was getting the company off the ground we had some short term health plan with a long term rider (cancer, etc treatable but serious 1 year+ disease). It was I think around $1100/month. I currently pay $2600 a month for group health insurance and the coverage is worse. My family is completely healthy. No routine meds, nothing but urgent care for the kids maybe once a year for ear infection or something.
Also consider that if you have a small group (less than 10-15) you are likely changing carriers every year or two due to significant rate increases. This infuriates staff since some doctors aren’t covered, some meds aren’t covered or require a bunch of forms from the doctor. It’s a huge pain in the ass.
Honestly the entire thing is a scam.