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Employees can purchase what best fits their needs, while small businesses are free to set their own budget.The QSEHRA also offers value to small businesses in unique situations, such as those with employees working in multiple states, those with employees who are covered under a spouse’s group policy, and even those with employees without insurance.Businesses may also pair the fund with a stop-loss policy that limits the businesses’ potential risk.
Small businesses offering group health insurance pay a fixed premium for the policy, though they may pass on a portion of the premium cost to employees.
Employees are responsible for copays and deductibles associated with the services they seek. The cost of traditional group health insurance is estimated to reach $13,363 per employee family in 2019 for businesses with fewer than 500 employees, according to Mercer’s National Survey on Benefit Trends With a group coverage HRA, the business offers employees a monthly allowance of tax-free money in addition to the group policy.
Employees are free to buy what fits their personal needs.
There are a variety of expenses eligible for reimbursement, including personal health insurance premiums, copays, deductibles, and prescription drugs.
With a self-insurance arrangement, the business assumes the financial risk for providing health care benefits to employees.
This means that rather than paying a fixed premium to an insurer, the business pays for each employee out-of-pocket claim as it arises.
The rising costs of health care aren’t just a problem for individuals—they’ve also impacted businesses that make health benefits a priority for their employees.
Small businesses have been particularly vulnerable. Over the last 15 years, the cost to cover one employee under group health insurance rose nearly 200 percent—from ,196 to ,435.
However, self-insurance is risky and larger than expected claims could put a small business out of business.
For this reason, self-funded health insurance is more common among larger businesses.