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5 Health Insurance Tips for Small Business

For a small business owner, offering competitive employee benefits is a crucial way to attract and retain strong talent. Whether you currently provide them and are planning next year’s renewal, or you are thinking of offering them for the first time, here are five things you should consider before your employees enter the open enrollment period for next year on Nov. 1:

Small Businesses Don’t Have to Wait

While your employees won’t be able to enroll in health insurance plans until November comes along, small business owners don’t have to wait at all to secure health insurance for their employees. The sooner you act, the better, to guarantee that you and your employees are protected. According to recent studies, healthier employees are happier employees and, as a result, will contribute to a more productive workplace. A more positive and constructive work environment is better for you, your employees and your business as a whole.

Health Literacy Is Important

Whether you’ve provided health insurance to your employees before, or you’re looking into doing so for the first time, it is always worthwhile to prioritize health insurance literacy. There is a host of terminology and acronyms, not to mention rules and regulations that can be overwhelming to wrap your head around.

The internet is full of relevant information, ranging from articles to explainer videos, that should have you up to speed in no time. Having a good understanding of insurance concepts such as essential health benefits, employer contributions, out-of-pocket maximums, coinsurance, provider networks, co-pays, premiums and deductibles is a necessary step to being better-equipped to view and compare health plan options side-by-side. A thorough familiarization with health insurance practices and terms will allow you to make the most knowledgeable decisions for your employees and your business.

Offering Health Insurance Increases Employee Retention

Employees want to feel like their health is a priority and are more likely to join a company and stay for longer if their healthcare needs are being met. A current survey shows that 56% of Americans whose employers were sponsoring their healthcare considered whether or not they were happy with their benefits to be a significant factor in choosing to stay with a particular job. The Employee Benefit Research Institute released a survey in 2016 that showed a powerful connection between decent workplace health benefits and overall employee happiness and team spirit. 59% of employees who were pleased with their benefits were also pleased with their jobs. And only 8% of employees who were dissatisfied with their benefits were satisfied with their jobs.

Alleviate Health Insurance Costs

High insurance costs can be an obstacle for small business owners. A new survey suggests that 53% of American small business owners stress over the costs of providing healthcare to their employees. The 2017 eHealth report reveals that nearly 80% of small business owners are concerned about health insurance costs, and 62% would consider a 15% increase in premiums to make small group health insurance impossible to afford. However, there are resources in place to help reduce these costs. One helpful way to cut down on health insurance costs is to take advantage of potential tax breaks available to small business owners. All of the financial contributions that employers make to their employees’ premiums are tax-deductible, and employees’ financial contributions are made pre-tax, which will decrease a small business’ payroll taxes.

Additionally, if your small business consists of fewer than 25 employees, you may be eligible for tax credits if the average yearly income for your employees is below $53,000. For small business owners, the biggest driver on insurance cost will be the type of plan chosen in addition to the average age of your employees. Your employees’ health is not a factor.

Use Digital Resources

You don’t have to be an insurance industry expert to shop for medical plans. There are resources and tools available that make buying medical plans as easy as purchasing a plane ticket or buying a pair of shoes online. Insurance is a very complex industry that can easily be simplified with the use of the advanced technology and design of online marketplaces. These platforms are great tools for small business owners to compare prices and benefits of different plans side-by-side. Be confident while shopping for insurance because all of the information is laid out on the table. Technological solutions such as digital marketplaces serve as useful tools to modernize the insurance shopping process and ensure that you and your team are covered without going over your budget.

Association Health Plans: What to Know

The U.S. Department of Labor recently announced regulations that it will allow for the expansion of Association Health Plans (AHPs). But what exactly are AHPs, and what do they mean for small businesses?

Essentially, AHPs allow small businesses to band together to purchase health insurance. The definition of a small business varies by state, with most states capping it at 50 employees, and California, Colorado, New York and Vermont at 100 employees. While we have seen efforts to promote AHPs since the 1980s, the new rules are different in that they also allow sole proprietors — those who own unincorporated business by themselves — to join the associations. Previously, sole proprietors could only buy individual coverage.

The new rules allow carriers to introduce AHPs as early as September 2018, so we may see plans on the market as soon as this fall and early next year.

How many small businesses and sole proprietors are affected?

According to the U.S. Small Business Administration, there are more than 5 million small businesses in the U.S., which employ almost 40 million people. There are also about 23 million sole proprietorships, which will likely continue to increase along with the growth of the gig economy and number of freelancers in the workforce. The expansion of AHPs, therefore, has the potential to affect the lives of a huge number of people.

Today, there are more than 35,000 associations in the U.S., organized by geography (state or greater metropolitan area) or industry. Some examples include your local Chamber of Commerce, the National Restaurant Association and the National Writers Union. Existing associations can be grandfathered in under the new AHP regulations, but new associations will have to meet the following criteria: 1) be in the same geographic area or the same industry and 2) have another business purpose other than offering health insurance.

Existing options for these small businesses and sole proprietors aren’t going away. Small businesses can still participate in the small group market and Small Business Health Options Program (SHOP), while sole proprietors will still be able to purchase individual coverage. AHPs will just add another layer of choice to the market.

See also: Why Start-Ups Win on Small Business  

Lower premiums

AHPs provide small businesses with the opportunity to offer health insurance at lower premiums, which is important because cost is one of their main concerns. Healthcare costs are an issue for almost everyone but are especially significant for small businesses, which are usually juggling between growing their business and paying for increasing costs of growing their team. AHPs are likely to provide lower premium options for two reasons: 1) They are exempt from requirements to cover the 10 essential benefits required by the Affordable Care Act, and 2) the law allows for more flexibility in the way AHP premiums are set.

Thus, AHPs allow some small businesses to be able to offer health plans with lower premiums. In turn, these lower premiums may mean that businesses can offer insurance to their employees when previously they could not afford to do so.

But with some caveats

While AHPs offer lower costs for some, it’s also important to remember that you don’t get the same benefits as you would with a traditional health plan. The Affordable Care Act outlined certain essential benefits that have to be included in health insurance plans, including preventive care, ambulatory services, emergency services, hospitalization, mental health services, maternity care, prescription drugs, rehabilitation, laboratory services and pediatric care. AHPs are exempt from these regulations and may not cover some of these things.

See also: Taking Care of Small-Medium Business  

The new AHPs are better for relatively healthy individuals without high needs for medical services. If you need any of the services mentioned above, or just generally use care more frequently, be aware that AHPs may not cover all the benefits you frequently use. The expansion of AHPs makes it especially important to understand plan benefits before purchasing health insurance. Buyers should compare premiums, benefits and network coverage between AHPs and other existing options on the market (including fully insured or self-funded plans). By doing this research, you can make an informed decision and pick a plan that best meets your employees’ health needs.

Conclusion

Providing health insurance as a small business can be costly, and Association Health Plans are an attempt to lower premiums and increase choice. While AHPs will result in lower-cost options, it is important to remember the plan benefits may not be the same as those in more expensive health plans. Now more than ever, it is critical for consumers to do their research and make informed choices about health insurance. When in doubt, seek out the help of licensed experts who can guide you through your options and help you make the best decision for your business and your employees.

4 Trends to Expect in Health Insurance

As debate continues to swirl about the future of U.S. healthcare regulation, here are the four high-level trends we may expect, and how stakeholders could be affected:

1. Healthy people may start leaving the individual market

Recent changes eliminate the penalty for not having health insurance. Under the ACA, consumers were charged a penalty for the year they lacked coverage. But now, when consumers file their taxes, they won’t be charged a penalty. Without the penalty, younger and healthier consumers may choose to not have individual coverage. However, this doesn’t mean they don’t need or want health insurance coverage. Expect employers to play an increasingly important role in filling the gap. That being said, not all employers offer health insurance. It’s still ambiguous what the self-employed (think contract, freelance or gig workers) will do. Under the likely scenario in which many of the self-employed forgo insurance under the new regulation, the uninsured rate may increase.

See also: A Road Map for Health Insurance  

2. Carriers may have to adjust their business

The premiums received from healthy people are generally a great hedge for the unhealthier, or higher-risk, populations for carriers. With the changes occurring in the individual market, carriers can expect a worsening loss ratio: The ratios paid by the premiums to the insurance company to cover settled claims begin to decrease. With the risk pool looking worse, carriers may concentrate on boosting their sales in relatively more stable segments.

3. Employer-sponsored coverage will be critical for employee retention

If the ACA’s employer mandate is repealed, small businesses may no longer be required to provide affordable, minimum-value coverage to their full-time employees to avoid penalties. That being said, with many people losing their individual health coverage, employees may increasingly expect health coverage from their employers. Employer-sponsored benefits have always played a critical role in attracting and retaining talent, but, with the current instability in the market, many employees will appreciate the security of an employer-sponsored coverage plan more than ever.

4. States may have increasing regulatory power

States may gain further flexibility to develop new healthcare models, including changes to affordability and choices offered. A number of states are pushing for their own legislation that could potentially give additional protection to residents beyond the federal level. Keep an eye on states like New York and California, which seek to create programs to increase benefits and requirements set by the ACA.

Will You Be the Broker of the Future?

Enrollment season is fast approaching, and shopping for insurance – especially for the first time – is overwhelming. That’s why individuals, families and businesses turn to brokers for help — the industry experts who are the front-line access point for understanding, purchasing and using health insurance.

Unfortunately, brokers are burdened by outdated technology, manual processes and complex new regulations that make the process of helping small businesses and individuals inefficient and impersonal.

The digital revolution in all other things e-commerce allows products and services to go directly to the consumer at the click of a button. How can brokers adapt to the increasing complexity of the business, attract more customers and grow their businesses?

These growing pains can be met with technology. But this can only happen as long as the end user is kept in mind, and the tech giants and startups that have flooded into the insurtech space to streamline and simplify the shopping and enrollment process have forgotten an important end user: the broker.

See also: Improve Reputations by Digital Risk Profiling  

The way we see it at Wellthie is that the health insurance broker business remains strong, and, for those who have embraced change and technology, it is only getting stronger. Individuals and small businesses aren’t just looking for answers at their fingertips, they are looking for service: a process that is transparent, trustworthy and efficient. However, unlike traditional goods and services, health insurance requires the skillful assistance of an expert. This indicates that unlike industries that have seen a decline in the use of brokers, such as the travel industry, the health insurance broker is an invaluable piece of the complex health care puzzle. Here’s why:

  1. Small businesses are the most reliant on brokers and spend a huge sum on health insurance. There are currently more than 5 million small businesses in the U.S., representing 90% of all U.S. enterprises and a total of 40 million employees. A small business with 10 employees would have to pay on average $50,000 per year for coverage, assuming 70% contribution. This is a large sum, and businesses will want to make sure they are spending their dollars wisely. This is why 74% of small businesses today rely on hundreds of thousands of licensed health insurance brokers.
  2. Regulation and compliance is a big deal. ACA, ERISA, HIPAA are just some of the acronyms of the complex body of regulations that govern what small businesses and individuals must keep in mind when offering coverage. These regulations continue to change and have many state-based nuances that require brokers in a given market who can navigate the waters.
  3. The products are complicated. Health insurance selection is a multivariable decision with many considerations and stakeholders. According to a Harris Poll survey, nearly three out of every four 18- to 34 year-olds said they are often confused about all the benefit options available to them. Although technology can make great strides at improving the process, buyers want to make sure that they didn’t make a mistake. Sellers also rely on brokers to ensure that the buyers follow the appropriate guidelines and underwriting rules of who can and cannot purchase benefits.

See also: 5 Accelerating Trends in Digital Marketing  

In health insurance, where the role of the broker is essential, technology provides the access point to improve the process for buyers, sellers and intermediaries. Brokers of the future who embrace technology will make health insurance more approachable and valued.