For a growing number of employees—especially younger ones—benefits and perks tend to be more attractive when choosing a job than higher pay. Businesses are recognizing this and want to offer their employees as many benefits and perks as they can. Some benefits, however, are becoming increasingly difficult to offer. Affordable health insurance options for small business owners are a perfect example.
Regardless of subsidies or programs like the Small Business Health Options Program (SHOP), the expense and headache of offering health insurance to employees is getting to be too much for businesses. Thankfully, there are alternatives available that can save employers money while providing a wider range of high-quality health coverage options to employees.
Business owners are well aware of the value employees place on perks like health care, and employers are desperately looking for ways to continue to provide high-quality health care benefits to their employees. Unfortunately, the steadily increasing costs of health insurance premiums is straining the ability of businesses to offer these benefits. In 2019, the average employer-sponsored health insurance annual premiums for individual coverage was $7,188 and a whopping $20,576 for family coverage. With no end in sight, these premiums continue to increase faster than wages and inflation. To further darken the outlook, employer contributions to private health insurance premiums are projected to increase from $619 billion in 2020 to a dizzying $902 billion in 2028.
Disappointingly, the list of solutions presented by the vast majority of insurance brokers at annual renewal time to get a handle on these rising costs tends to be incredibly short and simplistic—cut benefits, increase employee contributions, or both. But these aren’t fixes, they’re more like band-aids, and serve nothing more than delaying the inevitable. Benefits can only be stripped down for so long until there’s nothing left to cut. Employees can only be asked to contribute so much until the plan becomes more of a burden on them than an actual benefit.
Eventually, when businesses go down these paths long enough, they end up with two choices—continue to accept each annual increase for a plan no one likes or terminate it altogether. Either way, no one is happy.
With health care benefits such a desirable piece of compensation for employees, it’s critical that businesses (yes, even small businesses!) widen their search when looking for solutions. In a lot of cases, alternative coverage options may be the answer.
Alternative health coverage
When an employer chooses a group health plan, chances are, it’s not going to work for every employee. The coverage a healthy 25-year-old single employee is looking for is going to be different than one who is 50 years old and married with kids. So, it’s understandable that when it comes to choice, employees crave it. Unfortunately, it’s impossible to give them that choice with a single group health insurance plan option.
In January 2020, the Individual Coverage Health Reimbursement Arrangement (ICHRA) became available for employers. This game-changer allows employers to reimburse employees tax-free for individual health insurance. An ICHRA shatters the one-size-fits-all approach to group plans and gives employers unparalleled ability to control costs while giving employees considerably more health coverage options to choose from. It also removes the burden of annual renewals and the headache of managing a group health plan.
With an ICHRA model, employers are no longer limited to a single, one-size-fits-all health plan. Employees can now choose the coverage that works best for them and their family, and are free to enroll in individual health insurance plans or alternative options such as medical cost sharing plans.
For employers who are looking to give their employees the widest range of health coverage options, adding medical cost-sharing plans to their list of available benefits can be a powerful solution for employees. This health insurance alternative for small business owners is ideal for those employees who take ownership of their health, want the freedom to choose their own doctor (I mean, who really likes networks?), and believe in the idea of community and helping others when it comes to health care expenses.
The ability to choose
In the current health care landscape, consumers are shielded from the actual costs of their care. This has resulted in skyrocketing costs, expanding limits to services, and less choice overall. But we seem to have forgotten that healthcare is just like any other industry, and is sensitive (or should be) to consumer pressure. When you provide a solution to employees that puts them back in control, a number of things begin to happen. Consumer pressure works to improve innovation and quality, expand choices, and lower prices. As more and more employers do this, a growing amount of pressure will be put on the healthcare industry, ultimately forcing industry-wide change.
By combining groundbreaking tools and options such as ICHRA and medical cost-sharing with employee assistance programs and traditional insurance, forward-thinking, innovative employers—big and small—are now able to provide employees with more options than ever before. At the same time, these cutting-edge solutions are allowing businesses to regain much-needed control of their budgets.
If you’ve been told that there are limited options available for your business, it’s definitely time to look again. Forget the cookie-cutter approach—there are now viable, affordable health insurance alternatives for small business owners. By taking some time to explore these innovative options, you just might be able to give your employees more choices, gain more control over your budget, and build a stronger business in the process.