ACA Alternatives for Small Businesses

Picture this: you’re a small business owner trying your best to meet the demands of the market and focused on helping your company grow. Your mini-but-mighty band of employees are seemingly happy with their salaries and working environments. However, a question keeps popping up more and more often after March 2020 — “when will our company finally start offering insurance benefits?”

Approximately 60% of Americans have employer-provided healthcare. According to David Corvani, President and CEO of Cigna, “Employer-provided insurance is the cornerstone of the U.S. healthcare system, covering over 150 million Americans and spurring innovation that helps improve the overall health care marketplace (SHRM, 2018)”.

But for the 30.7 million small businesses that account for 99.9% of all businesses in the U.S., offering cost-effective, comprehensive, and competitive medical benefits is easier said than done.

But for the 30.7 million small businesses that account for 99.9% of all businesses in the U.S., offering cost-effective, comprehensive, and competitive medical benefits is easier said than done, meaning that 120 million people (amounting to 49.2% of America’s workforce employed by small businesses) are in a seriously precarious position.

While in the wake of the 2020 pandemic large enterprises are pushing the envelope with even better benefits — including telehealth appointments, wellness days, and preventative care and coaching apps — small and medium-sized companies find themselves thrown into an unbalanced benefits race that didn’t have the resources to run in. Given that “one-third of small businesses with less than 500 employees have no funds for unexpected expenses.” the situation exposes considerable shortfalls and vulnerabilities that have been present within the American healthcare system for decades.

The challenge of meeting rising employee expectations

The pandemic is quickly shifting the benefits that employees want and in a big way, although the emphasis strongly remains on healthcare access. A 2018 AHIP survey titled “The Value of Employer-Provided Coverage” found that over half (56%) of U.S. employees cite their healthcare plans as a main reason to choose to stay at a company and 46% believe that health insurance is a determining factor in choosing a new job.

And the trend is intensifying thanks in large part to the coronavirus and employees’ anxiety around potentially contracting it or having the disease unexpectedly impact their lives. MetLife’s 18th Annual US Employee Benefit Trends Study 2020 states that “74% of employees are concerned about at least one aspect of their well-being as a result of the virus and 2 out of 3 claim they feel more stress now in pre-COVID-19 times.”

To allay their fears in the coming benefits selection period, employees want more than they had before. A Fast Company article examines the new demands and notes that among the most important to workers include office-location flexibility (via telecommuting), mental health provisions, wellness programs, and additional coverage to help employees face the new realities of the workplace (such as added dental, vision, and childcare assistance due to closures, among others). In addition, COVID-19 related health and financial support also ranked highly, such as expanded workplace sanitary protocols, increasing paid sick leave for workers infected with COVID-19, 24/7 access to healthcare professionals, and reduced or waived copays and fees for COVID-19 testing.

“74% of employees are concerned about at least one aspect of their well-being as a result of the virus and 2 out of 3 claim they feel more stress now in pre-COVID-19 times.”

Temporary assistance and limitations of the ACA

Thankfully for small business owners, The Families First Coronavirus Response Act brings some (if only temporary) relief by providing them with refundable tax credits to pay for unplanned employee absences or extended leaves from work due to childcare closures, illness, or in the event of having to leave work to care for a family member afflicted with COVID-19, in addition to extended paid leave periods for those who are sick or quarantined.

While helpful, this is hardly a substitute for more robust workplace health provisions. Despite the fact that most business owners understand the importance of offering some form of health benefits to their employees, not all can meet the minimum health insurance requirements outlined in the 2010 Affordable Care Act (ACA).

And even with the introduction of Small Group Healthcare Plans (also known as SHOPs) — which aim to fill the gaps in affordable care for small businesses with 0-50 employees — the lack of competition, high premium costs, and limited coverage within their respective state’s health insurance marketplaces continue to make them an unpopular and unattainable resource for many small businesses.

Alternatives and how they can help

It’s more important than ever for small employers to find creative ways to invest in the health of their employees, but doing so will require a considerable amount of research and preparation. To keep costs low, Max Freedman from Business.com suggests taking the following 4 steps:

1. Shop around

Find out what coverage is important to your employees and use those parameters to narrow your search.

2. Encourage proactive healthcare

Find ways to encourage employees to maintain healthy lifestyles both formally and informally, such as by allotting paid workdays to go to preventative healthcare appointments or planning communal challenges and events.

3. Share more of the costs with employees

Employers can choose plans that shift costs more in the employees’ direction to save money, but make sure that it brings more value to them than it takes away from their paychecks.

4. Look for other discounts

Investigate to see whether you can opt-in for direct discounts for other benefits such as prescription medications or pharmaceuticals.

In conclusion, there are many solutions available for a small business of all sizes, such as:

• Private insurance exchanges
• Short-term medical insurance
• Health Savings Accounts (HSAs)
• Medical Cost Sharing Programs
• Qualified Small Employer Health Reimbursement Arrangements (QSEHRA)