As another year comes to a close, most small business owners are assessing health insurance plans to find the best options to benefit their employees and themselves. As one of those small business owners, you know health insurance is a major investment and that the right choices can make a world of difference in terms of company finances and employee satisfaction. With medical debt as a leading cause of bankruptcy, making sure employees have the coverage they need without overpaying is more crucial than ever. Here are a few tips to help you support your staff while making informed health insurance decisions and exploring opportunities to save during tax season.
Key Considerations for Health Insurance in Q4
Reviewing health insurance options during Q4 can help small businesses secure better plans for the upcoming year. Consider these strategies:
- Renegotiate Health Plans: Insurers often adjust premiums and coverage options for the new year. This season can be a great time to work with insurance brokers or directly with providers to negotiate better terms or find plans with better coverage-to-cost ratios.
- Evaluate Employee Needs: Health insurance isn't one-size-fits-all. Employees have different needs based on factors like age, family status, and medical history. By surveying or speaking with staff about their priorities, employers can understand what benefits matter most to their employees and work to include those in the health plan options that will be offered.
- Consider Offering Different Levels of Coverage: Many small businesses find that offering multiple plan levels, from basic to premium coverage, helps meet a variety of needs without overextending the budget. Giving employees choices allows them to select the coverage that best aligns with their medical needs and financial situations.
Supporting Employees in Choosing the Right Coverage
Offering your team members health insurance is just the start. You can also play a key role in helping your employees weigh their options:
- Provide Educational Resources: Health insurance can be confusing, especially for employees new to selecting benefits. Hosting informational sessions, providing comparison tools, or even working with a benefits advisor can help employees better understand the choices in front of them.
- Encourage Thoughtful Decision-Making: Health coverage should be based on individual or family needs, not simply on which plan has the lowest deductible or highest coverage. Employees should consider how often they see healthcare providers, whether they have chronic conditions, or if they anticipate major medical needs. Encourage them to weigh these factors when choosing their coverage level.
- Highlight the Risks of Under-insurance and Over-insurance: Underinsured Employees may face considerable out-of-pocket expenses that can lead to financial hardship if they have unexpected medical needs. At the same time, those who choose overly comprehensive plans may end up overpaying for benefits they don't need. Balancing sufficient coverage with manageable costs is critical.
Tax Deductions for Medical and Dental Expenses
Health insurance decisions don't just affect healthcare access; they can also impact taxes. For employees and employers alike, some out-of-pocket medical and dental expenses may qualify for tax deductions. Individuals may be able to deduct the costs they paid for themselves, their spouse or partner, and dependents during the taxable year if they exceed a certain percentage of adjusted gross income. Common deductible expenses include:
- Medical and dental insurance premiums (if not paid pre-tax through an employer plan)
- Costs for doctors, dentists, and specialists
- Out-of-pocket payments for medical devices, prescriptions, and certain therapies
For business owners, consulting with a CPA can be invaluable in understanding which medical expenses qualify for deductions and ensuring the right documentation is in place. Understanding tax laws can be challenging, but the potential savings make it worth the effort.
Let Myrick CPA Help You Make the Most of Your Health Insurance Choices
Choosing health insurance coverage and navigating potential tax benefits don't have to be daunting tasks. Myrick CPA specializes in helping small businesses and individuals understand the financial impact of their health insurance choices. By working with a knowledgeable CPA, you can make informed decisions that align with your budget, help your employees, and make tax season more manageable.
Ready to explore tax savings on medical expenses and more? Contact Myrick CPA to set up a consultation. Let's plan for a healthier financial future together.
