As your startup grows, offering a solid benefits package helps you attract and retain the right talent. In our modern age, most employees expect their employer to provide health insurance for them.
That means that even if you’re not legally required to offer this type of insurance, doing so might help you build the best team possible.
If you do opt to offer health insurance as part of your benefits package, you might be required to offer an open enrollment period. This guide walks you through the steps to pick an insurance provider, determine if you need to offer open enrollment through them, and, if so, how to navigate it.
#1: Choose the right health insurance partner
First up, if you want to offer health insurance, it’s key that you choose the right insurance provider. Here, you’re going to be looking at what’s called a group insurance plan.
Price is obviously a top consideration here. Beyond that, you want to choose an insurer who works with a range of healthcare providers that your employees would want to see. If all or the majority of your team lives in one geographic area, for example, it’s worth researching top doctors and the insurance providers they accept.
You also need to choose the type of network or networks you offer. You have a lot of options here, from a healthcare maintenance organization (HMO) to a preferred provider organization (PPO). Aetna, a large insurer, has a guide you can use to get familiar with your options here.
Some companies offer a mix of network types. As a startup, though, it’s generally easiest to stick with one for now.
As you look into your options for providers of the plan type you choose, make sure you read reviews about what it’s like to work with that insurer. You might find what looks like a great deal only to learn that administering employee plans through them is a total nightmare.
If you’re feeling overwhelmed, working with a group health insurance broker or independent insurance agent (meaning they don’t represent any single company) can help.
#2: Learn when you need to offer an open enrollment period
Per the Affordable Care Act, companies with 50 or more employees are legally required to offer health insurance and have an open enrollment period.
If your startup hasn’t hit the 50-person mark, you might still need to hold open enrollment. The laws in your jurisdiction or the requirements of your insurance provider might make this decision for you.
Once you’ve picked a health insurance provider, their team should be able to tell you if an open enrollment period is a requirement for your company. If they’re not clear, look into state and local laws to see if there’s anything you need to do open enrollment-wise.
#3: Determine the right time to schedule open enrollment
Your insurance provider might require you to schedule open enrollment at a certain time. If they don’t, you can technically run it whenever it works for your startup.
That said, the majority of companies align with state and national open enrollment periods, which fall at the end of the year. The International Foundation of Employee Benefit Plans (IFEBP) polled companies and found that the majority (77%) start their open enrollment period in October or November.
You also have some say in how long the open enrollment period lasts. That IFEBP poll found that 93% of employers ran their open enrollments for somewhere between two and four weeks, with a two-week period being the most common.
Whenever you decide to set the open enrollment period, make sure that it’s communicated to your employees. It’s generally a good idea to include that in your Employee Handbook and on your intranet if you have one.
#4: Support employees before and during open enrollment
About a month before open enrollment begins, start bringing it to employees’ attention. It can be helpful to send out an email alerting them to the upcoming period. If you can include information about their plan options, all the better. Many employees will want to start exploring their options as soon as they know open enrollment is coming up, especially if yours is short.
Work with your insurance provider to get any information you can about the plans you’re offering. Ideally, they should be able to provide you with a comparison table that breaks down the plan options and key aspects of each. You want to make it easy for your employees to see which doctors are in network and how much deductibles and copays will be.
It can also help to open a Slack channel or hold a roundtable about a week before open enrollment starts. Giving your employees a place to get their questions answered before the period officially begins helps to minimize stress for them and you.
#5: Apply a continuous improvement mindset
As a startup offering health insurance, you’re dedicating a portion of your runway to this employee benefit. In order for your company to reap the benefits thereof, you need your team to be happy with the coverage they’re getting.
After open enrollment, create a way for employees to provide feedback.
You may want to keep this channel open throughout the year. That way, you can better learn what kind of coverage they want and what’s most important to them. You might learn that a policy that covers most prescriptions really matters while employees don’t really mind having to get a referral for a specialist, for example. You can finesse your group health coverage based on the feedback you get, potentially offering better coverage at a lower cost to your company.
#6: Explore the tax impacts
Before you start your open enrollment period, you have one more step to make to ensure you’re making the most of your health insurance plan: talk to your accountant.
The amount you pay toward your employee’s plans might come with tax benefits. To ensure you don’t miss out on those, loop your accountant in on what you’re offering and how much you’re paying for it.
If you want to explore what offering health insurance would mean for your taxes and your bottom line, get in touch with our team. As experienced CPAs serving startups, we can help you navigate offering coverage and reaping maximal tax benefits from doing so.