More than any other single issue, Americans worry about the affordability and availability of health care—in fact, it tops the list (at 55%) among folks recently polled by Gallup. And it likely ranks high as a major concern among entrepreneurs, as well.
If so, there’s good reason: 69% of small business owners agree that navigating health care options takes too much time, according to the latest results of the MetLife and U.S. Chamber of Commerce Q2 Small Business Index (SBI) survey. What’s more, less than half of small companies say they’re able to provide workers with good coverage options, and 57% feel the cost of health care crowds out other small business priorities.
When pondering health care coverage choices, the top goal among SBI respondents is keeping insurance premiums and out-of-pocket costs affordable. Lack of education is a big problem, too: Merely 28% are familiar with association health plans (AHPs), only 22% understand qualified small employer health reimbursement arrangements, and just one in five are aware of taxable stipends.
Ask the experts and many will tell you that heads of small companies are frustrated by what they view as a flawed system in need of fixing.
“Most people are not equipped today in terms of time, resources or industry awareness to make the best possible health insurance decisions,” said Abir Sen, co-founder and CEO of Gravie. “Small business owners in particular feel trapped — they know that offering good, affordable health insurance is critical to attracting and retaining key employees, but they need to ensure that most of their available financial resources are spent in pursuit of their mission.”
Sameer Shah, owner of Khaana Marketing LLC, can vouch for how complex and time-consuming managing health care plans are.
“It’s mass confusion out there for small businesses,” Shah said. “Once I started shopping for coverage, I got bombarded by nonstop phone calls and unsolicited text messages. I had very little idea about how to go about this. But by talking with another small business owner and using Google, I found a good solution.”
Conduct research ahead of time and discuss your options with an insurance advisor.
Abir Sen, co-founder and CEO of Gravie
Not all entrepreneurs are as fortunate as Shah, however. That’s why it’s crucial to shop around carefully and explore different options, said Keith Ericson, associate professor at Boston University’s Questrom School of Business.
“It’s a mistake to focus only on one dimension of an insurance plan, like price; the cheapest plan may only offer limited financial protection or have a very narrow provider network,” said Ericson. “It pays to get multiple price quotes and compare plans with different cost-sharing designs. Research shows that prices for similar health insurance plans vary dramatically between insurers.”
Getting educated on how health coverage works and the plans and possibilities available can save money and provide better peace of mind, too.
“Conduct research ahead of time and discuss your options with an insurance advisor. Don’t just take what your broker tells you at face value — understand what resources, plans and models you have available to your business,” suggested Sen.
Ericson recommended considering a health plan offered through the Small Business Health Options Program (SHOP), for which you may be eligible for a tax credit up to 50% of your contribution toward premiums. Additionally, when scrutinizing a plan, ask for the plan’s actuarial value to get a standardized measure of how generous it is.
“Also, assign these health care researching and decision tasks to a designated individual in HR if you have the scale, but be involved in any final decisions,” added Ericson. “And if you have primarily low-income employees, consider paying them more but not offering coverage at all so that they can buy on the healthcare.gov marketplaces and take advantage of income-based subsidies.”
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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