Q: My MSP is rapidly growing. When should I start offering my technician and office staff health insurance and what are the best ways to start exploring my options?
As an MSP, you are accustomed to answering questions about patching and protocols. When your MSP grows, and you assemble a top-notch team of technicians and office staff, you’ll need to consider how to take care of them. That means answering questions about health insurance.
If you are like most MSP owners, you are not a health insurance expert, and that’s OK. Smarter MSP reached out to Winn Peterson, an independent health care consultant in Clearwater, Florida, who specializes in small businesses and counts many tech companies among his customers.
Why offer health insurance for MSP employees?
“Perhaps the biggest reason to consider offering health insurance is that if you aren’t offering it, another MSP will. While you may be the world’s coolest boss, if you aren’t taking care of your employees, someone else will,” observes Peterson. Peterson adds, “Loyalty can’t compete with good benefits.” That’s just the reality of operating a business.
As the competition grows more intense for tech benefits, MSPs are forced to dig deeper and be more creative in coming up with a package of perks to keep employees happy.
“Your question wasn’t about why you should offer health insurance. It was also when,” notes Peterson. “That is more complicated.”
It’s a complicated calculus because it will be different with each MSP. The “when” has to do with when you are 100 percent certain you can afford the ongoing commitment. And you won’t know that until you do your research and price out plans. There will be all sorts of variables: age of technicians? Will their families be covered? Are there any smokers among your staff?
What you don’t want to do is find a fantastic plan for your team and then four months later run into a cash flow problem where you can’t afford to pay for it any longer. It’d be better to continue offering no plan than to offer one only to have to take it away as a benefit months later because you can’t afford it.
Do your homework
Research plans and talk to your CPA. Make sure you can afford the monthly bills because this will be an ongoing expense. A health insurance benefits package is well worth it to keep employees happy, but you have to be sure you can afford it, and will be able to continue to afford it.
Deciding “when” will require a thorough analysis of your past cash-flow and projected future cash flow to the best of your ability. This is where having a steady stable of MSP contract clients is key, because you can better project your cash flow.
For many small companies that offer health insurance, it becomes their largest expense. Therefore, this is not a step you take lightly. Once you determine that you can afford this expense, then the process begins on determining a plan.
Finding the right plan
This is where Peterson recommends you find a licensed health insurance broker to work with you. Most people are not experts on health plans. With the introduction of the Affordable Health Care Act, it’s only become more complicated. The AHCA offers great possibilities, but also adds layers of complexity. You have IT networks to service — you don’t need to be dealing with health care networks.
If working with a broker doesn’t appeal to you and you want to do it yourself, one recommendation is to have all your workers get their own plans. The plans are totally their choice that they can tailor to their needs and you can offer reimbursement (set a cap if you need to). There can be some tax disadvantages to that, so you should talk to a CPA. However, this allows your employee to choose their plan and all you need to do is write a check to cover them.
A disadvantage to this route is that some people would rather get a root canal than navigate the health plans themselves. This is where it is just easier to connect with a local health insurance broker to guide and assist in setting up a single member health plan under your corporation.
Once this in place, have your MSP pay for the entire premium. The bonus is that it is one-time, tax deductible payment. Depending on your MSP’s cash situation, you can get anything, from plans with all the bells and whistles, all the way to a high-deductible HSA plan that you can have your business fund.
There are also faith-based health share plans that some small businesses with (hopefully) healthy employees find appealing.
Once you find a suitable plan, Peterson recommends setting aside that money in a savings account for three months. Make the payment to your savings account just as you plan to do for the health insurance. That will allow you to do a real, live simulation of whether you can comfortably afford the plan. If you feel your MSP can afford it, you’ll have a few months saved up prior to launching.
There is no one right answer, but with the right research, a steady enough stable of clients, and a good health insurance broker, you should be able to provide a great plan for your team. That, in turn, helps keep the team together and healthy.
Photo: Irenaphoto / Shutterstock
