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As a small business owner, you want to provide health insurance for your employees. Yet, the impact of health insurance on small businesses is huge, causing many of them not to be able to actually provide benefits to their employees. With health care costs on the rise this puts small
business owners at a major disadvantage when trying to recruit new employees.
The 2005 Annual Employer Health Benefits Survey which is provided by Kaiser Family Foundation and Health Research and Educational Trust provided some startling information about health coverage. It told us that three in five businesses offered health insurance to their employees. This is down nearly ten percent from just two years prior.
But, the catch is that this drop comes almost solely from small business owners offering health coverage to their employees. Almost 98% of businesses that have 200 or more employees provide health coverage. This drop is significant and it stems from the fact that the business owner can count on paying 9.2% more last year in health insurance then they did just the year before. This pattern of increase has a large impact on small businesses. In fact, since 2000 premiums have risen nearly 75%! The problem with this is that wages and inflation are not the total reason for the increase.
Health Insurance Choices: Small Business
With limited health insurance choices, some small businesses have determined the very best solution to be to just not offer it. As health care costs rise and families grow people are beginning to look at health coverage as not only a perk but must-have benefit. Since this hurts their chances of retaining and gaining new employees many business owners are having to come up with creative solutions.
Some put additional funds into their employee’s pockets without the added cost. Others can not provide this help. Small businesses have started to provide insurance at high costs to the actual employee, providing a large monthly fee (or bi-weekly) that they pay to help cover at least part of their health insurance needs. While others offer health insurance that has a very high deductible to be paid by the employee when they need to use it.
Another option for the small business is that of an HRA or Health Reimbursement Arrangement. This allows the employee the opportunity to open a savings account, virtually, for their health insurance needs. Few businesses have taken this on, but it may be the new wave of the future with more and more small businesses just unable to pay for the costs of health coverage to their employees.
The impact of health insurance on small businesses is large; there is no doubt about that. As wages and inflation slowly rise, so does the cost of health insurance. Still, those premiums continue to jump. That is why so many businesses are turning to other solutions for their health
insurance needs and finding some success with it.
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