Top 4 Health Insurance Trends for Small Businesses
Small business owners face constant changes. Over the past year, many may have dealt with the effects of the health care industry evolving, the ups and downs of the economy, even employees’ circumstances changing. Here are four health insurance trends that may help small business leaders as they prepare for the year ahead.
1. Exchanges Take Center Stage for Simpler Benefits Administration
Health insurance exchanges are now part of the employee benefits equation and for small businesses especially, these options can provide numerous advantages. Privately run exchanges are gaining traction and are expected to surpass enrollment in the government exchanges.
These online private marketplaces have grown in popularity because they can offer a mix of benefits products and help reduce an employer’s time spent on administration and paperwork. And regardless of your size, private exchanges can help your company offer a variety of benefits options.
Additionally, government exchanges can offer tax advantages for certain small businesses — making them an increasingly common option.
2. Businesses Turn to Multiple Strategies to Control Health Care Costs
Controlling costs is always a top priority for small businesses. In fact, 53 percent say it’s one of their top business objectives. So when it comes to rising health care costs, it’s no surprise many are looking to adopt cost-saving strategies whenever possible.
In 2014, 24 percent of small employers expected to increase employees’ share of premiums, and 24 percent expected to increase employees’ co-pays. However, shifting costs to employees can have an adverse effect. Employees at small businesses say if their employers shift an increasing portion of health insurance costs to them, then it would have at least a moderate impact on their job satisfaction and likelihood to consider looking for a new job. That’s why many employers will be considering ways to save on health care costs while still protecting their workforce.
For example, the defined contribution benefits model is gaining consideration since it is a way for employers to control the amount they pay towards benefits while still giving employees the ability to spend on the health care options they feel are most important. A couple of other health insurance trends to keep an eye on include high-deductible health plans tied to health savings accounts and changes in spouse coverage.
3. Online Benefits Enrollment Continues to Grow in Popularity
There’s no substitute for the conversations an employee can have with a benefits professional, but that doesn’t mean there aren’t benefits to streamlining some of your administration processes.
From 2011 to 2014, employees using online enrollment methods at small businesses increased by 62 percent. Other popular methods, including paper and face-to-face enrollment, saw very little change for small businesses during the same period. Most employees at small businesses appear to be happy with the shift: more than 9 in 10 (93 percent) say they’re at least somewhat satisfied with their current enrollment method.
Embracing technology for benefits enrollment can offer a more convenient process for employees and help reduce time wasted on mistakes with paper forms. Consider online options as a complement to your already successful face-to-face communication methods.
4. Rising Out-of-Pocket Costs Drive Employees’ Need for Strong Financial Safety Nets
Employees are gaining new found benefits choices, but many aren’t prepared to take on increasing out-of-pocket health care costs. According to the Health Research Institute (HRI) at PricewaterhouseCoopers, the average premium increase across all states in 2015 will be 6 percent. Yet, salary increases are only expected to reach 3 percent. These pressures, coupled with the fact that a majority of employees who work for small businesses (70 percent) at least somewhat agree they wouldn’t be able to adjust to the large financial costs associated with a serious injury or illness, prompt a need for strong financial safety nets.
One way employers can help protect their employees is by adding voluntary insurance benefits to their employee benefits packages. These benefits help provide an extra layer of financial protection by paying cash benefits directly to the policyholder if they get sick or injured and are a way to offer a broader benefits package to your workforce.
Not to mention, employees who are offered and enrolled in voluntary benefits are 37 percent more likely to say their current benefits package meets their family’s needs extremely or very well than those who aren’t offered voluntary benefits through their employer.
Is Your Business Prepared?
Every small business has its unique needs, but reviewing health insurance trends for the coming year can help build a strong foundation for the future. Consider best practices for these trends that can work for your small business, and head into the future on the right foot.