How to choose a benefits budget for your StretchDollar policy
While the admin stuff is easy with StretchDollar, there is a crucial step to decide when signing up — your monthly benefits budget. Or, another way to describe it — how much do you plan to give your employees each month for their health insurance premiums?
Let's walk through some questions you should consider when deciding on a budget and how to make the most out of your StretchDollar ICHRA benefits policy.
Budget planning
StretchDollar offers a simplified ICHRA health benefits policy, which gives employers more control over their benefits budget and more flexibility. For example, employers may contribute the same amount to all employees or different amounts to different "categories" of workers. Let's put this into a scenario.
Fixed benefit across the board: Imagine you're the owner of a small software company with seven employees. Most of your employees work full-time and are salaried. You choose the most straightforward option: offering all salaried workers a fixed, equal benefit amount.
Different amounts: Let's consider another scenario. Imagine you're the owner of a bustling restaurant staffed with a mix of full-time and part-time workers. In this setting, you choose the second option: varying benefits. Your full-time employees will get a different pre-tax amount than your part-time employees.
In each scenario, some employees might accept the benefit, and others might waive it. We'll dig into why and what that means in another section.
Benefits customization
StretchDollar ICHRA plans offer several options for small business owners to design a health plan that fits their needs. Contribution amounts can vary based on each category of worker:
● Full-time vs part-time workers
● Salary vs hourly workers
● Employee only vs employee with dependents (i.e., employee + spouse, employee + child(ren), employee + family)
Employee only vs. Employee with dependents
Since retaining your awesome employees is an important reason for offering StretchDollar benefits, you may consider adjustments for family coverage.
With StretchDollar, you can offer an additional dollar amount for each dependent your employee has. You get to choose the dollar amount and determine the maximum number of dependents.
What is the cost of individual health Insurance?
Understanding your state's health insurance cost is an excellent place to start when setting your benefits budget.
Health insurance costs vary, sometimes dramatically, depending on where you live. We won't get too deep into the reasons for these price variations except to say that health care is local, and each state, and often each city within it, has its own healthcare climate, shaped by factors like cost of living, state regulations, and the health of the overall population. Costs also vary by age — an older adult will pay more than a younger adult based on the assumption that we tend to use and need more healthcare as we age.
If you wish to have guidance based on where you live, contact sales@stretchdollar.com.
What is the cost of family health insurance?
A good rule of thumb is to figure that family health insurance plans (which include a spouse plus up to two children) cost about three times the cost of individual health care coverage. If that sounds complicated - don't worry, we can recommend a breakdown of funds, if you need some help.
Waive or accept StretchDollar health benefit?
While you are legally required to offer equal benefits to all employees of the same category/group, not all employees will accept the benefit. Some may waive the pre-tax health benefit because they already have health insurance through a partner. Others may opt out if their total household income makes them eligible for premium tax credits (that are more advantageous when compared to the StretchDollar health benefit.)
How can employees "waiving" or "accepting" impact your budget?
The total monthly benefit amount that you (as the employer) pay for may be less than you budgeted if more people waived than you anticipated. Keep in mind this may change if an employee's status changes. For example, if an employee has a a qualifying life event — such as they lose health insurance through a partner, marriage, etc. — they are able to enroll in StretchDollar health benefits and individual coverage even if it's after the 60-day enrollment window.
Remember, with StretchDollar YOU get to define the budget for employees that is affordable for your small business and good for your people.