The 3 Most Common Mistakes Made By Entrepreneurial Business Owners And How You Can Easily Avoid Them
Sadly, when it comes to creating a great benefits package for your team, too many entrepreneurial business owners make simple mistakes which cost them dearly. If you’re not careful, you could follow in their footsteps and end up falling well short of your goal.
But don’t worry – we’re here to help.
We’ve put together a list of the 3 most common mistakes made by entrepreneurial business owners – as well as easy-to-follow tips on how to avoid them.
#1 Choosing the Wrong Insurance Pool
By far and away the most common mistake entrepreneurial business owners make is choosing the wrong insurance pool for their team. We see it all too often - we’ve honestly lost count of how many people we’ve come across who have made this error.
All insurance is based on the Law of Large Numbers and entrepreneurial businesses do not have them. If you’re like most of our clients, you may not realize that the Group Platform was designed and created for businesses with over 100,000 employees. Unfortunately, they believe this is the only option available to them and continue to suffer through the never-ending problem of rising health costs. As your own experience has likely shown you, this platform does not work for you.
Fortunately, the new Individual Platform powered by ICHRA replaces this outdated platform and increases each company’s insurance pool to often over 200,000 people, immediately reducing premium costs.
For example:
If you are the business owner of a company that employs 20 people, your insurance pool with the Group Platform is 20.
If one of your employees goes to the ER and has a $20,000 bill, that bill divided by 20 is $1,000 for each of your employees.
That same ER bill with an insurance pool of 200,000 people is $0.10.
That’s a 10,000-fold difference in what you are charged.
#2 Failure to Maximize Tax Savings
Failure to maximize tax saving is another common mistake and is right up there with choosing the wrong insurance pool in terms of the amount of money it costs business owners. Most owners are unaware of powerful new tax laws available to them.
Pre-taxing your Group Health results in 24% Savings for most employees:
1. 12% Federal Tax Bracket
2. 4% State Tax Bracket
3. 7.65% Social Security & Medicare
But with the Individual Platform, you can achieve between 40-60% Tax Savings based on your employee’s annual income.
#3 Incorrect Benefits Selection Process
This mistake is pervasive on the Group Platform because HIPPA precludes you from asking your employees what their healthcare needs are. This makes business owners blind when making one of the costliest decisions for their business each year. In fact, it is the most recognized mistake out of the three by your employees – an error that could see you throw away thousands of dollars and leave you further away from achieving your goal of attracting and retaining talent than when you first started.
Your employees are unique. They each have their own health profile and potentially highly specific wants/needs out of their health plan. But when you use the Group Platform, that uniqueness is thrown out the window.
For example:
If you select a group plan that covers highly specific treatments or other high-cost benefits, your young and healthy individuals have to pay for benefits they both don’t want or need.
But if you select a group plan that hardly covers anything, your less healthy individuals won’t get the coverage they need from the plan.
This paradox simply CANNOT be solved with the Group Platform. However, it CAN be solved with the Individual Platform, powered by ICHRA. Your healthy individuals can pick low-cost individual plans or an HSA and your less healthy employees can select more robust plans that accomplish their specific needs.
These decisions are made at no additional costs to the employer.
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