If you’re a business owner or HR manager shopping for employee benefits for the first time, one question probably comes before all the others: How much is this going to cost?

That’s a fair question. Employee health insurance is a recurring business expense, and you want to offer a benefits package that helps you attract and retain employees without stretching your budget too far. The good news is that you don’t have to figure it out on your own, and you don’t necessarily have to pay the same amount for every employee. Your business size, workforce, contribution strategy, and employee eligibility can all affect your total cost.

4 Budget Scenarios for First-Time Benefits Buyers

Here are four common scenarios to consider when you’re budgeting for employee benefits for the first time.

1. You’re a Lean Startup and Cash Flow Is Tight

If you’re building a business, every recurring expense matters. That doesn’t necessarily mean you have to wait to offer health insurance. A Defined Contribution model can give you more control over how much you spend on employee health benefits.

With CaliforniaChoice, you determine how much you want to contribute toward employee health insurance premiums. Depending on your strategy, you can contribute toward a specific plan, tier, or benefit level, all eligible plans, or the lowest-cost qualifying plan. That gives you a way to establish a benefits budget that works for your business.

Employees then apply your contribution toward the coverage they choose. If they select a plan that costs more than your contribution, they pay the difference. So you can offer employees meaningful health coverage options without having to cover the entire premium for every plan. And your contribution strategy isn’t locked in forever. At renewal, you can revisit your contribution and adjust it based on your business and employee needs.

2. You’re Growing and Competing for Talent

If your business is doing well, you may be hiring and ready to grow your team. You could find that qualified candidates have choices, and many of your competitors offer health insurance.

If candidates are turning down your offers because you don’t offer benefits, or employees are leaving for companies that do, the cost of not offering health insurance can add up, too. That’s where it’s helpful to look at employee benefits as more than an expense.

Health insurance can be an important part of your overall compensation package and may help you attract and retain the employees your business needs to grow. Better news that is that you can determine how much you’re willing to invest.

With CaliforniaChoice, you establish your Defined Contribution toward employee premiums. You may choose to contribute more to make your benefits package more competitive, or establish a contribution that fits your current budget. For a smaller workforce, that can make the cost of offering benefits more manageable while giving employees access to coverage.

3. You’re a Sole Proprietor Paying for Your Own Health Insurance

If you’re a sole proprietor, you may already be paying for individual health insurance for yourself or your family. If you’re now hiring employees, it’s worth comparing your current situation with the cost and structure of a small-business group health plan.

Depending on your circumstances, moving to an employer-sponsored group plan may give you and your employees access to different coverage options and contribution strategies. It may also change how you approach your own health insurance costs. The key is to compare your options rather than assume individual coverage is automatically the best fit.

A broker can help you look at the numbers and explain how a group health plan could work for your business.

4. You Have a Mix of Full-Time and Part-Time Employees

If you run a restaurant, retail, or other business with a mix of full-time and part-time employees, don’t assume you’ll have to provide benefits to everyone. Employee eligibility can depend on factors such as hours worked and the requirements of the health plan and applicable law. That means your workforce structure can have a significant impact on your overall benefits budget.

Before you build your budget, take a close look at:

• How many employees you have
• How many are full time versus part time
• Which employees may be eligible for coverage
• How much you want to contribute toward premiums
• Which types of coverage you want to offer
• What your employees are likely to value most

Understanding these details upfront can help you build a more realistic budget and avoid surprises.

How to Budget for Group Health Insurance Beyond the Premium

When you’re buying employee benefits for the first time, it’s easy to focus on one number: the monthly premium. But there’s more to consider.

Think about how much you want to contribute, which coverage options you’ll make available, and how your strategy may change as your business grows. That’s one reason a Defined Contribution model can be useful for small businesses. You establish the amount you’re comfortable contributing, while employees have more flexibility in selecting from the coverage options you make available.

With CaliforniaChoice, employees can choose from a variety of health plan and coverage options, depending on what you decide to make available to your group. Your benefits budget doesn’t have to determine a one-size-fits-all solution for your employees.

How a Broker Helps You Build Your Benefits Budget

Buying employee benefits for the first time can feel complicated, but you don’t have to navigate it alone. A benefits broker can help you:

• Compare health plan options
• Understand employee eligibility
• Estimate your total costs
• Develop a contribution strategy
• Understand available coverage options
• Find ways to balance employee needs with your budget

And here’s something many first-time buyers don’t realize, working with a broker typically doesn’t cost you extra. Your broker can provide guidance and help you understand your options as you shop for coverage. If you don’t already have a broker, you can find a broker here.

Ready to Start Building Your Benefits Budget?

There’s no single number that every small business should spend on employee benefits. The right budget depends on your business, your workforce, and what you’re trying to accomplish with your benefits package.

The important thing is to start with what you can afford, understand your options, and build a strategy that can grow with your business. Employee health insurance doesn’t have to be all-or-nothing. With the right approach, you can give your employees valuable coverage while maintaining control over your business costs.

When to Start Offering Employee Health Insurance

Still wondering whether your business is ready to offer health insurance? Read 5 Signs Your Small Business Is Ready to Offer Health Insurance for five signals that it may be time to add employee health benefits.