When starting a business, new owners are often caught up in decisions regarding two of their three biggest budget items: wages and rent. Yet there's a third major expenditure that often doesn't come to the forefront of the conversation until later: creating a suitable group health plan that also makes responsible business sense.
Giving serious thought to plan benefits and costs early on will help attract top talent and establish a workplace where employees know their personal well-being is valued. It's a challenge especially crucial for independent advisory businesses in a time of changing employee expectations. A 2016 internal survey at Raymond James revealed that 50% of independent firms offered group health insurance. In 2021, a similar internal survey showed a significantly increased 91% of independent firm owners offering a group plan.
Balancing the annual impact of health insurance with your profit and loss ledger in order to provide comprehensive employee benefits and coverage to your employees is critical to recruiting top talent and ensuring their overall satisfaction and long-term retention.
In doing so, one of the biggest decisions business owners will face is whether to cover employees only or employees plus family members. When weighing these options it's helpful to understand the expectations of your employees and the total premium cost to the business. In 2022, the average annual premiums for employer-sponsored health insurance were $7,911 for single coverage and $22,463 for family coverage,
One strategy is to contribute to health insurance premiums based on individual earnings. Operating under the premise that high earners can afford higher premiums, the most well paid workers in the office receive the lowest percentage of employer coverage and a higher percentage is contributed to lower earners. This has often been the approach of large wirehouse firms, which may be helpful to keep in mind if employees are joining your practice from that type of environment.
After the independent firm owner has decided the type of coverage that's needed and set a realistic budget for employer contributions, the next step is shopping for a provider. Typically, provider options can be found through a broker or state exchange but be sure to also check with your HR benefits payroll provider or broker-dealer, as they may have partnerships with professionals in this space to help.
For example, our HR benefits payroll partner offers group plan options across our independently affiliated firms that even single-person businesses may join. When it comes to teams, each member can pick the option that suits them best from a menu of plans at a flat rate to the business. This eliminates the need to choose which elements — HSA, FSA, high- or low-deductible, etc. — to include in employee plans and instead puts the decision in their hands.
