Being able to provide your employees with corporate health insurance options can be a big selling point for your organisation. By offering perks like health cover, you can attract high-value, talented employees, and retain them, reducing the high cost of employee turnover and remaining competitive in your industry.
Unfortunately, many people (both employees and employers) assume that small businesses cannot offer the same benefits as larger firms. As the owner of a small company, you may be under the impression that you cannot qualify to offer corporate health cover or cannot afford it.
You'd be wrong! There's no reason you can't offer benefits just as attractive as larger companies. By matching the benefits enterprise companies provide, such as security, training and qualification, performance bonuses, and / or corporate health insurance, you can build a strong and devoted workforce that has unmatched loyalty to your brand.
Corporate health insurance options for small businesses
How do you know if you are eligible to offer corporate health cover? If you are a small business, there is nothing to stop you. An Australian small business is defined as a business with an Australian Business Number (ABN) and having Goods and Services Tax (GST) activity with a turnover of less than $2 million per annum, or one that employs less than 20 people. It also includes micro-businesses that employ 0-4 people, and which are GST active (paying annually).
There are many different ways to access corporate health cover, and many configurations you can use to tailor your offering to fit your employee's needs and your budget. As with individual private health cover, there are three levels of cover you can offer as a corporation:
- Hospital cover only: This insures your employees against the costs of in-hospital treatment, including surgery theatre fees and accommodation.
- Extras cover only: This covers your employees solely for ancillary or general treatment services outside of Medicare, such as physiotherapy or dental procedures.
- Combined hospital and extras: This is a comprehensive cover option that can provide the best value and most coverage for your employees.
The costs of corporate health insurance
Once you have decided which types of coverage you wish to offer, you have to decide on a level of support. This can range from simply giving your employees the option of voluntarily funding their own health cover at a discounted corporate rate, to partially funding or fully funding their health cover as an employee benefit. Each options has pros and cons.
- Voluntary cover: This option puts the least burden on your company, and the most on your employees. If they opt into the corporate health cover, they will pay their own premiums, but the premiums will be discounted since it is a corporate health policy. This can be a good option if you are unable to cover their premiums yourself.
- Partially funded: This option splits the responsibility for paying premiums between you and your employees, and can provide a nice perk without causing undue hardship to your organisation's bottom line. You can figure out how much you can afford to spend on each employee, and provide that amount towards their premium as part of their benefits package. It's a good middle ground when you need to sweeten the deal but can't carry the full burden of premium payments.
- Fully funded: This option means taking on the costs of funding the policies, but can be a great way to attract top talent. If your business can afford to bear the full cost alone, you may find that your pool of ultra-qualified candidates suddenly increases significantly, and you may be able to negotiate employment contracts that give you financial relief in other ways.
Another option would allow you to offer discounted corporate health insurance through excess funding. Rather than absorb part of the cost of the premiums, you can allow your employees access to a significantly discounted policy with a higher excess, and contract with them to pay their excess in part or in full should they need hospital treatment.
Excess funding allows risk to be shared, and can cut premiums by as much as 15%. This make voluntary funding by the employee more attractive. It can also reduce your liability for Fringe Benefit Tax (FBT), which is a tax you must pay on benefits you provide for your employees, like funded health cover premiums. By providing to cover any potential excess instead funding health cover directly, you won't have to pay the premiums and the associated tax.
Implementation of corporate health insurance
Finding the right corporate health insurance for your small business is the first step. Know what your budget is for subsidising premiums if you want to offer partially or fully funded cover. Alternately, consider if you prefer a voluntary scheme, or the excess funding option.
HICA offers a free consulting service that begins with a discussion with you about your needs, continues with research of the current market, and circles back with a range of cover options from which you can choose. Finally, we'll help you get your new health plan option(s) up and running and your employees covered.
For additional information on our services, or to find out more about corporate health insurance for small businesses, get in touch with the team at HICA today.