We have written on many occasions about the impacts of uncertainty on the healthcare market. Individuals, large employers, and small businesses are feeling the effects of changes to the United States healthcare system, with the Affordable Care Act being at the forefront.
These changes and uncertainty are making it harder than ever for small employers to offer their employees quality, affordable health benefits. A recent survey
from the Kaiser Family Foundation and the Health Research & Educational Trust (HRET) uncovered a large quantity of data around employer health benefits.
One finding in particular had to do with the number of small employers who offer health benefits to their employees. Let’s take a closer look at the survey results.
Only 50% of Small Businesses Offered Health Benefits to their Employees in 2017
The 2017 Employer Health Benefits survey showed that just 50% of small businesses
– classified as companies with 3-49 employees – offered health benefits to their workforce last year. When you look at the historical trend, you can see that this percentage has continued to decrease annually. In 2010, 66% of companies
with 3-49 employees offered health benefits.
The survey also breaks down small employers into subgroups
. For employers with 3-9 workers, the percentage drops even further to only 40%. On the other hand, 66% of employers with 10-24 employees offered health benefits, and that number increased to 78% for companies with 25-49 workers.
Just like with the overall small business percentage, these subgroups have also seen significant drops in the number of employers offering health benefits. In 2010, 76% of employers with 10-24 employees offered health benefits, and that number jumped all the way up to 92% for businesses with 25-49
It’s concerning to see this downward trend for small businesses and their employees, but with the current state of the healthcare industry, this trajectory will likely continue for 2018.
What is Causing this Small Business Trend?
When looking at the current state of the United States healthcare market, there are a few reasons for this downward trend in the percentage of small businesses who offer their employees’ health benefits.
The first, and likely the biggest culprit, is the increasing premiums for small group healthcare plans. Due to the uncertainty surrounding the Affordable Care Act
, many insurance providers were forced to increase premiums as business costs rose. These health benefit hikes meant that many small employers were priced out of the small group market.
In addition, as costs increased for insurance providers, a few additional market fluctuations have occurred. 2017 saw health insurance companies eliminating some of their small group health benefit plans
. In some cases, providers decided to exit the small group market all together, leaving employers to scramble to find cost-effective alternatives.
With further ACA regulatory changes expected to occur throughout 2018, there could be even more volatility in the healthcare market. This could cause premiums to continue to rise as we get closer to 2019.
How can small employers overcome this uncertainty and the rise in health insurance premiums to offer their employees affordable, quality benefits? One option available is to consider strategic HR partnerships and other alternatives
, such as with a professional employer organization (PEO).
Partnering with a PEO can Help Overcome Health Benefit Challenges
By working with a PEO, small employers gain access to the quality and quantity of benefits that are usually available only to large-group employers. Additionally, a PEO partnership can have numerous business benefits, such as a savings on HR administrative costs
and increased profitability
PEOs, especially those who are familiar with the local markets, can help small businesses offer their employees competitive, cost-effective health benefits, along with numerous other employee benefits and perks.
It’s important to note that some small employers are better fits than others for a PEO solution. Generally, small employers with 10 to 125 employees can benefit from a partnership with a PEO. This size matches what was studied in the 2017 Employer Health Benefits survey.
Beyond company size, the industry a business operates in can make for a better PEO partnership. Marketing firms, financial services firms, professional services firms (such as accounting companies and law firms), and technology companies in particular can gain from a PEO solution. For more industries that can benefit from a PEO, click here
While not all small employers are perfect fits or might not be ready for such a partnership, exploring PEOs and other HR outsourcing solutions can help small businesses overcome the challenges created by today’s healthcare market, and uncovered in the Kaiser Family Foundation and the Health Research & Educational Trust (HRET) survey.
Want to learn more about PEOs? Check out our eBook, How Well Do You Know PEO? This eBook provides an overview of the PEO industry as well as helpful information for brokers and employers!