A recent survey found that small business owners are not receiving better, more affordable care under the Affordable Care Act (ACA). At least not through traditional group health insurance.
The Newtek Business Services June survey polled over 1,500 small business owners and found that half (51%) say their company has not received healthcare that is both better and more affordable under the ACA. Additionally, a majority (55%) of business owners say they are unsatisfied with or unsure about their current healthcare solution.
This survey echoes the reality that small business group health insurance premiums have nearly doubled since 2009, alongside decreasing health benefits and higher deductibles. And, 91% of small businesses report increases in their health plan at their most recent health insurance renewal (source).
An Affordable Small Business Healthcare Solution Under the ACA?
Here's an affordable small business health insurance solution to consider -- cancel the small group health insurance plan, switch employees to individual health insurance, and provide an employer-funded contribution toward their individual health insurance (a "defined contribution").
While the ACA has done little to help with group health insurance costs, it has made significant improvements to individual health insurance. Individual health insurance costs less, on average, than group health insurance premiums, covers healthy and sick employees the same, and provides employees more choice. There are also premium tax credits which lower the cost of premiums even more for most employees.
Plus, when a business cancels the group health insurance plan employees are automatically eligible for a special enrollment period for purchasing individual health insurance coverage. Meaning, employees will not have to wait until the next open enrollment period (starting on November 15) to purchase individual coverage.
To summarize, small businesses can find an affordable healthcare solution under the ACA, and it involves three easy steps:
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Step 2 - Give employees monthly "healthcare" allowances to spend on health insurance; whether this be tax-free via a Healthcare Reimbursement Plan (HRP) or a taxable stipend.
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Step 3 - Allow employees to purchase health insurance in the health insurance marketplaces and receive premium tax credits that cap their health insurance costs as percent of income.
This type of approach is gaining popularity with small and medium businesses. In fact, it's estimated 60% of all small businesses will abandon group health insurance in favor of individual health insurance and defined contribution healthcare by 2017.
