It’s no secret that healthcare plans represent a dilemma for many small businesses: on one hand, offering comprehensive, all-inclusive health insurance is often crucial to attracting and retaining talented employees, but on the other, setting up and maintaining a healthcare plan is expensive, confusing and time consuming.
According to a recent survey of 827 small businesses from Small Business for America’s Future, more businesses (55%) are worried about the costs of providing health insurance to their employees than they are about the dangers of COVID-19 (37%). The study also found that 76% of small business owners do not provide coverage because the cost is too high, while 53% of small business owners said they do offer insurance but are considering dropping it because of rising costs.
Roughly 90% of small business owners said their health insurance costs increased over the past four years, with 40% responding that costs have risen by 10% or more a year.
What to Do?
There are several ways to reduce the cost of health insurance while at the same time providing your full-time employees with the health coverage that they need for both themselves and their family members.
#1 Shop Around for a New Plan
If your insurance provider keeps increasing costs at an unreasonable rate, then simply shop around with a health insurance broker, such as eHealth, for a new plan that offers modest increases in prices. If you have a preferred provider organization (PPO) plan, keep in mind that with the rise of value-based health care – new types of medical care systems that are meant to drive the cost of care down – those types of plans are a thing of the past. You may consider switching to types of plans that are generally cheaper, such as:
- Exclusive provider organization (EPO) plan, which have a curated number of doctors but don’t require referrals;
- Health Maintenance Organizations (HMOs), which restrict patients to a particular set of doctors, but often charge higher co-pays if the patient sees an out-of-network physician, and
- A tiered plan – a plan that offers multiple tiers of physicians under the in-network umbrella. The first tier of doctors already have arrangements with the insurance carrier to offer financial discounts for services, and those savings are passed on to you and your employees.
#2 Offer a Plan With an FSA Option
Flexible spending accounts (FSAs) allow employees to set aside pre-tax dollars to spend on major medical events, such as surgery, teeth replacement, high-cost prescription drugs, or any other future medical need. Insurance plans that offer FSAs typically will offer you, the business owner, high annual deductibles but also a discount on premium contributions while still providing health insurance to your employees.
#3 Look for Insurance Plans That Emphasize Value-Based Care
Value-based health care is the new trend in medicine today, and there are several ways insurance companies can offer it and pass the savings along to your business in the form of lower monthly costs. Look for plans that include:
- Wellness plans rewards;
- Free annual physicals and flu (and COVID-19) vaccination shots, and
- Prescription drug coverage that requires pharmacy benefit managers (PBMs) to automatically offer cheaper, generic versions of prescription drugs before selling patients the more expensive brand name ones, and
- Dedicated service experts.
#4 Shifting Healthcare Costs to Employees When Applicable
While not ideal, you may want to choose a cheaper insurance plan that places a greater burden of healthcare costs on employees. Some plans can save you money by raising the deductibles and copayments for medical services, and raising the costs of using out-of-network doctors. Be warned, however, that employers must balance this approach with affordability requirements under the ACA.
As a benchmark: A 2020 Kaiser Family Foundation health benefits survey found that full-time employees paid on average 17% of the premiums for single coverage, and 27% of the cost for family coverage. The survey also showed that employers are shifting costs to employees through increased deductibles and out-of-network copays.
You also may want to add “working-spouse” provision to your health coverage plan. These provisions limit an employee’s spouse’s access to a plan when the spouse works for another employer that offers health insurance, thus saving you time and administrative costs.
#5 Educate Yourself and Your Employees
If you and your employees don’t have a solid grasp of the ins and outs of medical insurance, know that you’re not alone. The more your employees are educated on their health benefits, the better and lower-costing choices they will make. You may want to consult with a health insurance brokerage firm such as eHealth or your current insurance carrier to:
- Provide training on open enrollment;
- Give a simplified summary of benefits from your insurer, as well as explanations on deductibles and in-network doctors, and
- Provide access to a health insurance expert, either through your own HR manager (if you have one) or an agent from your insurance carrier.
Which Insurance Companies Are the Most Popular?
Whether you have two employees or 200, there are insurance companies that have a reputation for offering generally lower costs and specialize in providing coverage for small businesses. The most popular seven companies are:
- UnitedHealthcare, which has a reputation for providing one of the most extensive network of physicians and emphasizes the use of modern technology for virtual healthcare;
- Blue Cross Blue Shield, which operates through 36 local, independent doctor networks and is known for affordable tiered plans;
- Anthem, which has the largest network of doctors and takes an integrated approach to medical care through combined health plans, which connect patient data in order to more effectively manage care;
- Humana, which offers a diverse array of tiered plans and emphasizes preventative care, and wellness programs;
- Kaiser Permanente, the largest managed care organization in the U.S. and offers one of the widest array of plans specialized for small businesses;
- Health Care Services Corp., the largest customer-owned health insurance company in the nation that emphasizes affordable plans for small businesses through value-based care, and
- Oscar Health, a company that emphasizes cheaper insurance plans for small businesses by utilizing healthcare technology such as telehealth, electronic appointments and automatic wellness checks.
While setting up a health insurance plan is time consuming and often painfully expensive, we all want to see everyone have access to the healthcare that they need, especially our employees. The good news is that employer health care costs have not risen as sharply as it has in recent years. There is an affordable, well-priced plan out there that is right for your business and employees, it just may take some time to find the right one, but in the end, it will be time well spent.