Small Business Employee Healthcare Insurance: Yes Or No

Shock waves are hitting a majority of smaller businesses receiving notices about the premiums due for employee policies in 2016.

The new rates exceed 20% for many enterprises based on surveys done by Information Strategies, Inc. and other organizations.

An average 23% increases were reported in ISI’s survey of 233 randomly selected businesses under 50 employees. Other soundings surfaced similar increases ranging from 19% to 24%. One respondent reported a 49% increase.

Many companies are pondering alternatives such as providing stipends in lieu of benefits, increasing deductibles, reducing coverage to the minimums required by the Accountable Care Act, or doing away with any coverage.

For companies with under 50 employees, this last alternative does not involve government sanctions.

Organizations with 100 or more employees have weighty penalties for abandoning employee healthcare insurance.

Perhaps hardest hit are enterprises with 51-99 employees who are seeing massive increases in premiums.

During the past two years, companies have held down premium costs by shifting the burden to employees either through higher deductibles, increasing the percentage paid by employees, or trimming benefits.

Most of these savings have been wrung out and there are few other alternatives.

While last year, only 6% of respondents said they were considering eliminating healthcare insurance benefits, in 2015 the number more than doubled to 13% in ISI’s survey and two others reviewed.

There are two ways available to small businesses can attack the cost hurdle.

The first involves a government program offering subsidies to smaller enterprises. This program is complicated and less than 100,000 companies have attempted to use it. The program is call the Small Business Healthcare Options Program.

Another involves setting up a private exchange enabling employees to purchase individual policies and obtain government subsidies under the ACA.

It has been reported that such programs can save companies significant dollars while providing individually tailored healthcare insurance. To learn more about this approach small business leaders can go to HealthMarkets

No matter what course of action is taken, small businesses can expect 2017 premium rates will be higher.