Avoid Texas Small Business Health Insurance Mistakes

Texas small business health insurance is a complicated business. However, it’s also important in attracting and retaining top talent. 

But what happens when your health insurance plan could be better? How does that manifest for your business costs and growth?

A quick spoiler: minimal health insurance plan packages don’t improve your business. 

Let’s look at what happens when your benefits package isn’t what it should be and how you can avoid the dark side of inadequate small business health insurance plans. 

What Is Inadequate Small Business Health Insurance?

Inadequate Texas small business insurance refers to health coverage that fails to meet the minimum essential needs of employees, leaving them exposed to significant financial risks. For small businesses in Texas, inadequate health insurance can show up in a few ways: 

Limited Coverage

Health insurance plans that cover a narrow range of medical services, excluding minimum essential benefits like mental health coverage, prescription drug services, or maternity care, can be considered inadequate. 

High-Deductibles 

Plans with very high deductibles require employees to pay a substantial amount before insurance starts covering medical expenses. The high upfront cost can discourage employees from seeking necessary care, potentially leading to worse health outcomes. 

High Co-Payments & Co-Insurance

Even after meeting deductibles, high co-pays and co-insurance fees can make healthcare unaffordable for many employees, particularly for routine visits and medications. 

Limited Network Options 

Inadequate small business health insurance may limit employees to a small network of healthcare providers. If the network is too narrow, employees might struggle to find in-network doctors or specialists, especially in rural areas of Texas, or may be faced with paying higher out-of-network fees. Geographic limitations can reduce the quality of care your employees receive. 

Inadequate Support for Chronic Disease Management 

Health insurance that does not provide adequate coverage for managing chronic conditions can leave employees struggling to afford necessary medications and regular check-ups, leading to worsening health over time. 

Insufficient benefits, high out-of-pocket costs, limited provider networks, and non-compliance with legal standards characterize Texas small business health insurance. 

Such coverage fails to protect employees from financial hardships and limits access to essential healthcare services. Significant repercussions for both employees and employers are the result. 

The High Costs of A Bad Group Health Insurance Plan 

What about small business owners? How does a bad group health insurance plan affect your business?

Increased Employee Turnover

First, a bad employee health insurance plan can increase employee turnover. According to the Bureau of Labor Statistics, the annual turnover rate across the U.S. in 2017 was 26.3%. This means that if your company offers an average salary of $50,000, your turnover replacement costs could total tens of thousands of dollars per employee. 

Losing employees is expensive, especially for small businesses. Additional costs for recruitment, training, and lost productivity quickly add up. Retaining employees with better benefits costs significantly less. 

Higher Healthcare Costs for Employees

Inadequate coverage can lead to higher out-of-pocket expenses for employees, causing greater financial strain and potential dissatisfaction with their employer. 

Potential Legal Penalties 

Small businesses with over 50 employees are also at risk for legal penalties due to non-compliance. While Texas has no specific ACA-related fines for employees, the federal government does. It’s crucial to ensure your small business group health insurance plans meet minimum essential benefits at the least. 

Decreased Employee Productivity 

A lack of quality health insurance can lead to absenteeism, presenteeism, and overall lower productivity due to the strain caused by health issues. According to the CDC, worker illness and injury cost employers around $22.5 billion annually.

Lack of Employee Morals and Job Satisfaction

Believe it or not, employee morale influences your business growth and profit. The smaller your business, the greater you feel this influence. When health insurance is inadequate, it can lead to decreased engagement and performance. 

Reputation Damage

A lack of quality health insurance plans can also damage your overall business reputation, making it harder to attract and retain top talent. 

What Happens To Your Small Business If You Underinsured Employees?

While we already covered what happens to your employees if you fail to provide proper Texas small business health insurance, what will happen to your business? 

Multiple things can happen. 

For example, in the long run, you could face higher insurance premiums if employees’ health deteriorates due to inadequate coverage. The more your employees need to visit their doctor, the more you’ll pay to cover them. 

Additionally, you could lose your competitiveness in the job market. More qualified, talented, and experienced employees will seek out companies that offer better employee benefits, which could put your company at a disadvantage. 

Finally, you could face litigation due to inadequate health insurance coverage, especially if employees face significant out-of-pocket expenses for critical care. You will also face a fine of up to $2,970 per full-time employee minus the first 30 if you fail to offer minimum essential coverage. 

Now is The Time to Invest in Small Business Health Insurance in Texas 

There is no better time to step up your small business health insurance plan. While you may believe you’re saving money by reducing your employee benefits package, the reality is that hidden costs could put a strain on your budget. 

From legal fines to loss of productivity to potentially losing out on a highly skilled job market, your business can only afford to offer a good, small health insurance plan if you want to grow. 

So, what’s the solution? How do you offer a quality Texas small business health insurance plan without overextending your budget?

We recommend working with a professional group health insurance broker—and we are one. Over the past several decades, we have worked with countless small businesses, successfully saving them thousands of dollars in insurance costs. 

Our team keeps you compliant and employees happy. If you’d like to find out how much we can save you on your small group health insurance in Houston, contact us today. We’d be happy to answer your questions.