Small Business Health Options: Exploring the Benefits

Within the current economic landscape, healthcare costs continue to rise. According to a 2014 survey taken by Kaiser Family Foundation/Health Research & Educational Trust, the average annual family health insurance premium was $16,834, and for individuals, it was $6,025. Health insurance was listed as the most valued benefit by employees, according to an Employee Benefit Research Institute survey in 2013: 78 percent of those surveyed ranked health care insurance as the most important benefit an employer can offer.

Unfortunately, in the current health insurance environment, small business owners can’t hope to compete with larger corporations in offering benefits. Not only are their profit margins generally thinner, but because they employ fewer people, they do not have access to the same lower rates insurance companies extend to businesses with a larger pool of risk. While entrepreneurs and small business owners desire to attract the best talent they can, the scales are not tilted in their favor, and they know it.

Watching premiums go up year after year, often in double-digit increases, many business owners are tempted to surrender and make their employees responsible for their own health and dental care insurance. There are a number of strategies that businesses can employ if they are committed to maintaining their benefits packages, however. These include:

• Renegotiating insurance terms. When the bad news of premium increases arrive in the mail, many owners assume they have no room to negotiate and must accept what’s there on the page. However, research and a willingness to dicker can save a noticeable amount of money. Owners should shop around and see if other companies offer better rates, and go over the past years claims history to see if the pool of employees they will be insuring over the next year will be more or less expensive to insure. Changes in staffing can alter the risk pool significantly.

• Investigating the Small Business Health Options (SHOP) exchange. Under the Affordable Care Act, businesses with 50 or fewer employees can shop for group plans and enroll any month of the year. Tax credits are available to businesses that qualify and they are designed to extend smaller businesses more help.

• Exploring funding individual plans instead of offering group ones. Currently, it’s quite possible that employees of small businesses might find better, more affordable options on the ACA exchanges than what their employers can offer. In these cases, employers may be better off reimbursing their workers for their healthcare costs, either by offering wage increases or setting up reimbursement plans.

• Offering high-deductible health insurance in tandem with an HRA or an HSA to offset any higher costs to employees. Companies with sicker pools of workers will find this a less appealing option, but businesses with younger employees can make this work, for much less money.

No matter what options small business owners choose, it’s important to fully explore all the options available to them. There has been a lot of upheaval recently in healthcare, and that can be intimidating or discouraging, but to remain competitive with larger companies, it’s imperative that business owners understand what is out there and what is feasible for them to do.