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Everything You Need To Know About Health Insurance Stipends

Updated on September 1st, 2023 by Cassandra Love9 mins read

Most Businesses offer a group health insurance plan for their employees. However, sometimes you may start working for a company that offers a health insurance stipend instead of a health plan. So, what is it? Great question, below you’ll find everything employees and employers need to know about this alternative employee benefit. 

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For Employees

What Is A Health Insurance Stipend?

A health insurance stipend is a set amount of money that your employer gives you to pay for individual health insurance. Typically, you receive this money in your paycheck. Think of it almost like a bonus in every paycheck. While your employer pays this extra money in hopes that you’ll use it for health insurance or other out-of-pocket medical costs, you don’t have to.

Health Insurance Stipend Vs. Health Reimbursement Arrangements (HRAs)

A health insurance stipend kind of sounds like an HRA doesn’t it? While both are employee benefits that go towards paying for your healthcare, they are entirely different. First, the way you receive the money is different. A stipend goes directly into your pay, while an HRA you receive a reimbursement after paying for your medical expenses. The biggest difference you’ll find is your stipend is taxable. Since it is added to your wages it works as taxable income. On the other hand, HRAs are tax-free. Another difference, as we noted above, is you can use the money however you see fit. With HRAs you can only use it towards qualifying health care expenses. With a health insurance stipend, you are free to use the money for anything from bills to savings, to buying out your amazon wishlist. Legally, your employer can’t ask you for proof that you used the money for health insurance. Who doesn’t love extra money with no strings? 

The Benefits of a Health Insurance Stipend.

Health insurance stipends give you a few advantages. For starters, this gives you tons of options for your health insurance. You’ll be able to pick and choose the best health insurance plan for you rather than depend on your employer’s group plan. Group plans tend to offer general basic coverage based on the needs of everyone overall. When you choose your own plan you can make sure it’s tailored specifically to what you need. 

 

Additionally, if you receive an advanced premium tax credit your stipend won’t affect your eligibility. Advanced premium tax credits are a tax credit that you can get ahead of time to lower your health insurance premium. When you apply for health insurance through the Marketplace, you give an estimate of how much money you’ll make that year. Depending on that estimate, you may be eligible for the credit to use up front to lower your premiums. If you have group insurance through your employer you won’t be eligible for this credit. 

Disadvantages of a Health Insurance Stipend

As with anything, there can be a few downsides with a stipend. Let’s say you don’t use the stipend for health insurance, instead you are covered under your spouse’s or parent’s plan. So, essentially your stipend is just extra wages and you use it for personal expenses. If your employer decides they want to switch to a group plan and no longer offer a stipend then this can seem like a pay cut. Now you’re making less than what you’ve become accustomed to. Depending on how much the stipend is, it could cause you some financial stress. Another downfall is, as we mentioned, the stipend is taxable. So with a stipend more money will be coming out of your check in taxes than it would if you didn’t have one.

For Employers

Pros Of Offering A Health Insurance Stipend

Offering a stipend can be a better option for several reasons. For one, it allows you to completely customize the benefits. There are no limitations or minimum contributions with a stipend. So, you can choose how much you pay. It can also be beneficial for small businesses who may not be able to afford to offer group insurance. The average group premium for individual health insurance is $7,911, and $22,643 for family. This way you can still offer a health benefit to your employees. Another benefit for employers is that stipends are easy to manage. It’s just a payroll addition, rather than having to manage a group plan or an HRA. 

Cons Of Offering A Health Insurance Stipend

When you give your employees a stipend, they don’t have to use that money towards health insurance. You may hope they will but you can’t be sure since you legally can’t request proof of insurance. Not to mention, if your employee sees their stipend as part of their pay and you decide to stop offering it they might view it as a pay cut. Which in turn can lower morale altogether. 

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Types Of Health Care Stipends You Can Offer

You have two options here, you can give employees a monthly stipend to pay for all of their health care costs or divide “healthcare” into smaller more specific payments like:

 

  • Medical – This is for basic medical like doctor’s appointments, hospitalizations, preventative care, and health screenings.
  • Dental – For things like x-rays, cleanings, fillings etc.
  • Vision – eye exams, prescriptions glasses, contacts, or corrective eye surgeries
  • Prescription drugs – This helps employees pay for any medications their doctor proscribes. 
  • Mental health – Meant to pay for therapy, counseling, or psychiatric help.

You can also offer wellness stipends. Like health care stipends, wellness stipends are payments to help your employees focus on their physical and mental well being. However, wellness stipends are more geared towards a healthy lifestyle rather than medical health. These can be things such as:

 

  • Fitness – This can go towards gym memberships, fitness equipment, or personal trainers.
  • Nutrition – For things like meal delivery services, weight loss programs, or customized meal plans.
  • Alternative therapies – This could be anything from massages, to acupuncture, to chiropractic treatments.
  • Financial health – Your employees can get financial coaching or finance workshops.

FAQ

  • Will a stipend always be paid into my check?

For the most part yes, health insurance stipends are paid directly into your paycheck. However, instead of paying into your check your employer can also put the money into an expense card or a lifestyle spending account (LSA).

  • What are alternative options to health insurance stipends?

There are a few other ways an employer can opt to pay for health insurance for their employees aside from a group plan:

 

    • Health Reimbursement Arrangements (HRAs) – This is a tax-free alternative to a stipend. It lets employees tailor their healthcare package to their specific needs. HRAs require employees to pay for their own medical costs before they can file for a reimbursement. The downside is that many employees might not have access to the money they may need to pay for expensive bills. Making it difficult to pay for the services and wait for the reimbursement to process.
    • Health Savings Accounts (HSAs) – If a company offers a high deductible health plan for their group insurance they can also offer an HSA. Employees would choose how much of their check should go into their HSA. This lets employees set aside money before taxes to pay for health insurance.
    • Flexible Spending Accounts (FSAs) – An FSA works similarly to an HSA in that the employee can set aside money into the account before taxes to pay for healthcare costs. The difference is the HSA belongs to the employee. Meaning the money stays in the account even if they don’t use it and if they leave the company it goes with them. FSAs belong to the employer. So, if the employee doesn’t use it within the year they lose that money.

 

  • How much will the health insurance stipend be?

Unfortunately, there’s no direct answer for this. The company is completely in control of how much the stipend will be. There are no minimums or limits to how much an employer can offer. Ideally, the amount would be enough to cover health insurance premiums for an individual health plan.

  • Are there requirements for companies to offer health insurance stipends?

No, any company can choose to offer a health insurance stipend. Unlike with group plans where a certain percentage of employees need to opt in, or with HSAs where the company needs to offer a high deductible health plan first there are no requirements.

Need Help?

If your employer pays a health insurance stipend instead of a group plan then you have to enroll in your own health insurance plan. Shopping for health insurance can be time consuming and frustrating. The best way to find a cheap plan with the perfect level of coverage for you is to compare plans. That’s where EZ comes in. We’ll make the process faster and easier by letting you compare plans in your area in just a few minutes. Our licensed insurance agents work with all of the best insurance companies in the country. They can talk to you about your budget and need to help you choose the best plan. We compare plans and offer advice for free. To get your free instant quotes enter the zip code in the bar above, or call us at 877-670-3557 to speak with an agent directly. 

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How To Insure Your Small Business

Updated on September 1st, 2023 by Cassandra Love9 mins read

how to insure your small business text overlaying image of a business man workingYour company will be better protected from potential losses and liabilities if it has small business insurance. Business insurance can assist in covering claims resulting from professional errors and natural disasters. As well as bodily injuries and property damage. If you do not have this coverage for your company, you will have to to pay the cost of any claims out of your own personal assets. This forces the owners of many small businesses to make the difficult decision to permanently close their businesses. Continue reading this article if you want to learn how to obtain insurance for your small business.

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Get Started

Looking for business insurance and making sure you’re getting all the coverage you need can get complicated. So, let’s break down what you need to do to start.

1.Collect information

Obtaining business insurance is as complicated as any other aspect of managing a company. In order to provide you with an insurance policy, insurance companies require a substantial amount of information about your needs, risks, coverages, and costs. 

 

You might be familiar with some of it or have it handy. While other details might be trickier to track down. EZ can help in that regard. We have helped thousands of other customers through the commercial insurance application process. So, we know what is required of you and how to get it. Let’s go over the requirements so the application process goes as quickly and easily as possible.

Business Operation Information

Your insurance agent or company will need a thorough understanding of your company’s operations in order to provide you with an accurate quote. If you’re in the contracting business, for instance, it’s not enough to know that you’re an electrician. The percentage of commercial versus residential work you do, whether or not you use subcontractors, do you use ladders or scaffolding, do you install alarms, etc., are all relevant details. 

 

The types of questions you’ll be asked vary widely by profession. It’s fine if you don’t know the answers right away. But you’ll save time and energy if you have a solid grasp of your operations before beginning the application process. In order to receive quotes from insurance companies based solely on operational exposures, you must be as specific as possible with your agent. 

Ownership and Experience

Questions about yourself, such as how long you’ve been in business and how much experience you have, will be asked. As well as questions about your company’s operations. Your quote will be based on the information you provide to the insurance company regarding the business’s owners and, in some cases, employees. If your resume is strong, you may be able to negotiate a lower price. 

Financial Data

Get some numbers ready. Your insurance agent or provider will inquire about projected earnings, employee headcount, outside vendors, and stock on hand. These estimates are predicated on the length of your policy, which may or may not align with your fiscal year. If your policy is audited at the end of the policy term and you were wrong in your projection, you could be penalized. However, you are not required to provide any confidential reports.

Contracts

If you use contracts with customers, your insurer will probably want to see a sample to make sure you’ve included all the necessary safeguards to protect your business from claims and lawsuits. If you offer professional or other services but don’t have a contract, you may be required to draft one before receiving an estimate. 

Claims History

You will also need copies of your “loss runs,”. Which are the insurance term for the report that details all insurance claims made on behalf of your company. A three to five year claims history across all of your policies is typically required by insurance companies. If you are unable to obtain these reports from your current insurance agent, the quoting process will be significantly slowed down. Your insurance agent will be able to assist you in writing a letter to request these reports. 

Any Current Policies

Although it’s not required for a quote, having copies of your current policies on hand can help the insurance agent review your coverage and identify any potential gaps. The truth is that a lot can change in a year. It is possible that a policy review will serve as a prompt to either add or remove pieces of machinery, vehicles, etc.

2. Research

When was the last time you purchased something that needed to be assembled, but you chose to ignore the instructions? How did you determine that it was constructed properly? Unless you follow the steps, it is difficult to know for sure what the outcome will be. Obtaining the appropriate insurance for a small business is no different.

 

Reading the instructions isn’t nearly as interesting as learning about the different types of business insurance. Even though you might want to skip this step, spending as little as twenty to thirty minutes doing research could end up saving you a lot of time and money. You don’t need to become an expert. But having a fundamental understanding of the coverage options will help you make better decisions. Regardless of how long you’ve been in business, whether or not you seek the assistance of a professional. The first part of your research should be knowing the types of insurance available.

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Types Of Business Insurance

  • General Liability – For a smaller company, this can be a lifesaver in the event that you are sued for damages or injuries caused by a third party.
  • Errors and Omissions or Professional Liability – These policies can help a small company defend itself against claims of negligence or bad advice.
  • Group Insurance – Group insurance is a great way for small businesses to provide health care coverage and other medical benefits to your staff.
  • Workers’ Compensation – In the event of a workplace injury or illness, these policies will pay for the employee’s medical care, ensuring their safety.
  • Property Insurance – Coverage is good in the event that a company’s inventory or technological equipment are damaged or destroyed as a result of a natural disaster.
  • Commercial Auto – This covers any vehicles that your company uses for work.
  • Business Owner’s Policy – Small business insurance is a type of business insurance package that protects businesses from a variety of risks, including those associated with property and liability.

Every business has its own set of needs. Once you know the basics of business insurance, you should look into which ones are best for your business. For instance, an accountant who works from home might have a basic general liability policy. But an accountant who owns a building that customers come to would be better off with a business owners policy, or BOP, that covers more. Even though both accountants do the same job. There are differences in how they do it that affect their insurance needs.

3. Contact a Business Insurance Agent

You can work with an EZ agent who specializes in small business insurance to get the coverages you need. To work with our experts, you can get a free quote online. Talking to your insurance agent about your business can help you figure out what you need and how much coverage you need. They can help you figure out what kinds of coverage you can get and how much it will cost.

How To Determine The Business Insurance You Need

What kind of insurance is best for your business depends on your specific needs and the laws in your state and industry. You’ll need to carefully look at your business to figure out what kinds of insurance you need. Talking to an insurance expert is always a good idea if you want to find the right mix of coverage to make sure your business is legal and financially safe.

1. Analyze your legal responsibilities and business assets.

First, you should take a close look at your business and assets to figure out what you want to insure. What kinds of insurance are required by law, and where do your other responsibilities lie? For example, a machine shop might want to make sure its workers are covered in case they get hurt, while a jeweler might want to make sure they aren’t robbed. As required by law, the owners of a large distribution company would insure both their goods and their employees. Each state has its own rules, so make sure to talk to your agent to figure out what you need to insure.

2. Analyze Your Risk

Look at your new risks and responsibilities. This will help you figure out what kind of insurance will protect your business the best. For example, if your business is on the bottom floor of an office building in a flood-prone area. You’ll probably want comprehensive flood insurance. A business in a dangerous industry will probably want insurance to cover the risk of its employees getting hurt.

3. Decide How Comprehensive Your Coverage Needs To Be

Depending on what you’re insuring, you may need basic insurance or insurance that covers everything that could go wrong. Think about how much the loss would cost and how likely it is to happen. This will make it less likely that you will pay too much for coverage you don’t need or not get enough coverage for your safety.

How EZ Can Help

EZ can help whether you need group health insurance for your employees or commercial insurance to protect your business. Our agents work with the best insurance companies in the country to make sure you and your employees get the best insurance. In fact, we can find you the best coverage for your budget and save you hundreds of dollars a year. Call us at 877-670-3531 for help with group health insurance or 877-670-3538 for help with commercial insurance.

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Is Your Business’ Health Coverage Considered Minimum Value?

Posted on January 4th, 2023 by Cassandra Love4 mins read

If you have 30 or more full-time employees, the IRS considers you an “applicable large employer”. And are required to follow specific requirements when it comes to offering health insurance to your employees. One of these requirements is that you provide your employees with health coverage that meets what is known as the minimum value, or MV.

 

To make sure that you’re following the IRS’ rules and that your health insurance plan meets the guidelines for minimum value, it’s important to understand exactly what minimum value is, so you don’t face any financial penalties.

a blue umbrella over several white umbrellas with the words " If Your Business' Health Coverage Considered Minimum Value?" Witten underneath the umbrella

What Is Minimum Value?

Minimum value is a standard set for health insurance plans offered by employers to ensure that the plans provide at least the minimum coverage mandated by employer responsibility provisions. 

 

Specifically, the health insurance that you offer your employees is considered minimum value if the plan pays at least 60% of the total allowed cost of benefits that are expected to be incurred. And the plan benefits include substantial coverage of doctor services and inpatient hospital services.

How To Determine if You’re an Applicable Large Employer (ALE)?

You are an ALE if you average at least 50 full-time employees, including full-time equivalent employees, during the prior year. A full-time employee for any calendar month is one who has at least 30 hours of service per week. To determine if you are an ALE, you must:

chalkboard with a checklist on it

  • Determine how many full-time employees you had each month of the prior year. This provision defines a full-time employee for any calendar month as one who has, on average, at least 30 hours of service per week during the month.
  • Determine how many full-time equivalent employees you had each month of the prior year. To do this, combine the number of hours of service of all non-full-time employees for the month (but no more than 120 hours per employee). And divide that total by 120.
  • For each calendar month, add your full-time and full-time equivalent employees for a monthly total. Add the monthly totals. Divide the sum of the monthly totals by 12. If the result is 50 or more employees, you are an applicable large employer.

Penalties For Not Meeting the Minimum Value

The IRS will penalize you if the plan that you offer your employees doesn’t meet the minimum value standard. If you have more than 30 full-time employees, you must meet the minimum value standards for at least 95% of your employees. Otherwise, the annual per-employee penalty for providing unaffordable coverage for 2023 is $4,320.

Need Help?

When it comes to offering healthcare plans to your employees, the more you know, the less you spend. Not only can EZ agents help you navigate the complicated system and avoid penalties, but we can also find you the best group plan for your business! Comparing plans with one of our agents is the best way to make sure that you know what all of your options are. EZ’s agents are trained, licensed, and highly experienced with all the different types of group plans. And they know what will work best for you and your employees.

 

Our agent will navigate through all available plans to find the most coverage for your employees. While keeping more money in your pocket. We get how time-consuming and frustrating it can be to comb through all the different group plans in your area. We will provide you with a personal agent who will assess everyone’s needs and compare all of the plans available in minutes. All of our services are free, and there are no obligations. To get free quotes, enter your zip code in the bar above, or to speak to an agent, call 888-998-2027.

2023 Employee Benefits Benchmarking Report

Updated on August 11th, 2023 by Cassandra Love1 min read

Covid has certainly changed a lot and the employee benefits space is not immune. We created a free employee benefits report resource to help you understand all of the changes in this space.

 

Our 2023 Small Business Employee Benefits Benchmarking Report includes topics such as:

  • How plan offerings have changed post-Covid
  • ​​​The different benefits now offered by companies
  • The role geography has on how employees value various benefits

Want to learn more? Download the full report below:

Benchmarking Report: The Changing Landscape of Employee Benefits

After you’ve read the report, and decided you’re ready to find the best plan for your business, the next step is to get your free, personalized quotes.

Need Help?

Trying to figure out which group plan is best for you and your employees is a lot of work. There are so many insurance companies, and each has multiple plans to compare. Because EZ.Insure works with a variety of insurance companies around the country, we have easy access to all available plans. We can compare plans in minutes for free, answer any questions about business requirements for group insurance, and guide you through the process. We work hard to save you as much money as possible, because we know that group insurance can be costly. 

To get free instant quotes, simply enter your zip code in the bar above, or to speak directly with an agent, call 888-998-2027.

The Complete Guide to Open Enrollment for Employers

Posted on October 3rd, 2021 by Cassandra Love7 mins read

It’s here! Open Enrollment for your group health insurance plan has come around again, running from November 1 – December 15. Now is the time when you can choose new benefits, or review and change existing health insurance benefits for your employees, and we get it: this time of year can be hectic and stressful, with all of the questions that employees (and you!) might have. Not only that, but you’ve got the weight on your shoulders of knowing that this is your one chance to get this done until next year! But don’t worry, we’ve got you – first, check out our tips below for a smooth Open Enrollment, and then speak to an EZ agent who can help you find the perfect plan for you and your employees. 

employees sitting at desks in an office
To qualify for group health insurance, your business must have at least 1 full time employee other than yourself or your spouse.

Does Your Small Business Qualify for Group Health Insurance?

Let’s start with the basics. If you’re new to offering group health insurance to your employees, you might be wondering how you qualify to offer it. Well, it’s actually pretty simple, and more likely than not, your business will qualify! You need to:

  • Have at least one full-time employee who is not the business owner, or the spouse of the business owner
  • Be legally registered as a business entity in your state (regulation for this varies from state to state)
  • Contribute at least 50% to your employees’ monthly premiums

Why Take Advantage of Open Enrollment?

Ok, so your business qualifies to offer group health insurance, but should you? And if you’ve already got a plan in place, why review it during Open Enrollment? Well, there are a few very good reasons to do both:

  • You and your employees can save money – Enrolling in a group health insurance plan is often cheaper than enrolling in an individual plan. Not only that, but the more employees you can get to sign up, the cheaper the plan could be.
  • Changes in life circumstances mean changes in insurance needs – If you do already offer group health, you definitely need to take advantage of Open Enrollment and use this time to reassess your and your employees’ needs. Has anything major changed, like births, deaths, or marriages? If so, you might be able to find a plan that offers better or more tailored coverage for a better price.
  • Group health can mean tax advantages – Who doesn’t love to save on their taxes? Take this time to look into ways you could be saving, like checking if you qualify for the small business health care tax credit, or by choosing to offer tax-advantaged healthcare options, like HSAs, FSAs, or HRAs. 

What Should You Be Thinking About When Choosing a Plan?

Another important basic step in the process: knowing what you should be thinking about when exploring your options. Here are 4 essential factors that should go into your decision-making process:woman in a blue button up shirt with her hand on her chin and question marks around her

  • Costs associated with the plan – You’ll want to consider how much employees want to pay in premiums, while also remembering that you have to contribute at least 50% of the amount each month. Also keep in mind things like deductibles, copays, and coinsurance that can all add up, depending on how often your employees access medical services. 
  • The metal tiers of available plans – Familiarize yourself with the so-called metal tiers of plans: Platinum, Gold, Silver, and Bronze. These terms have nothing to do with quality of care, rather they indicate what percentage of costs a plan will pay for covered benefits. For example, popular Silver plans will usually cover around 70% of costs, with the insured paying the remaining 30%. 
  • The type of plan you want – In addition to choosing a metal tier, you’ll also have to consider what type of plan you want to offer to your employees. For example, you can choose from HMO, PPO, POS, and EPO plans; each of these types of plan will offer different price points, since some are more flexible about things like network coverage.
  • Insurance companies – Check out which insurance companies offer plans in your area, and what their networks look like; you want to be sure that they offer affordable care in locations that are convenient for your employees.

What Should Employees Consider?

So you know what you need to be thinking about, but are you ready to answer your employees’ questions, or take on their concerns? You can help guide them in choosing or changing their plan by telling them to take the following factors into consideration:

  • The price of the plan – Let your employees know exactly how much the plan will cost them per paycheck.
  • Their dependents – Your employees should think about who they will need to have covered by their plan, especially if they plan on adding on family members in the coming year, or if they have added any new household members since last year. You’ll also need to make clear your policy on contributing to dependent coverage.person with a megaphone and exclamation points coming out of it
  • Any changes in coverage – Make sure your employees know what is covered under the plan, especially if there is anything new being added, like dental or vision coverage. 
  • Any added benefits – In addition, if your plan is going to have any new benefits, like telemedicine or wellness programs, let your employees know.

Top Tips for Employers

Group health insurance can seem a bit overwhelming, especially since studies show that 35% of employees have little to no understanding of their healthcare coverage! Not only that, but  22% of employees are confused during open enrollment, 20% are anxious, and 21% are stressed, so it can be tough to know how to approach this subject. But there are some ways to make the process go a little more smoothly. For example, you can:

  • Go digital – You don’t have to print out reams of paper, or have endless meetings with employees about benefits (which might be tough with all of the work-from-home going on right now)! Save paper, toner, and your and your employees’ sanity by offering everything in PDF form, and by considering holding a virtual benefits fair, which employees will be able to access when it works for them from the comfort of their home. 
  • Keep it simple – When emailing employees about their benefits, be as concise as possible, with price per paycheck and benefits clearly laid out, using language that is easy to understand. You can also include any FAQ sheets you get from your insurer or agent, as well as a glossary of terms and acronyms. 
  • Send out a survey – While you do have to be careful about privacy when it comes to employees’ health, there is no reason why you can’t send out an anonymous survey to find out what your employees are most interested in when it comes to their insurance plan, so you can either make a choice to change the plan you’re offering, or can recommend the right plan to them.
  • Be creative with your communication – Email is great, but you have tons of options when it comes to follow-up communication and reminders about enrollment, including:person sitting at a table with their cell phone in their hands
    • Text messages
    • Posters
    • A dedicated intranet webpage
    • Videos on screens in common spaces
    • Notices on paychecks (both hard checks and online)
    • A chat channel, through a platform like Slack
    • A Twitter chat, complete with hashtags that other employees can search

Yes, it’s Open Enrollment time again, what some might consider the most confusing time of the year. But you know? You got this, and we’ve got your back if you need help choosing, reviewing, or changing your employees’ healthcare plan. Come to EZ.Insure for a dedicated agent who can answer all of your questions, every step of the way, as well as find you fast, accurate quotes and sign you up for a great plan – all for free! No hassle, no obligation. To get started with us today, simply enter your zip code in the bar above or to speak to an agent, call 888-350-1890.

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