Rising Health Care Costs for Small Employers
One of the biggest problems small employers face today is the steadily rising costs of health coverage for its employees. This paper covers how health care premiums have risen in double digits for the past five consecutive years, how many small businesses are forced to drop health care coverage for their employees because of the out of control costs, and what small businesses are doing to control the costs and still offer health care coverage to their employees.
The good news is that small businesses have been doing better than the overall economy. During the past few years, they have overcome rough times and developed a resiliency that is serving them well. The bad news is that the rising
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The small businesses characteristics, including whether a small firm is a component of a larger business, the composition of its workforce, and the industry of which it is a part, are the most important factors in determining an employer's ability to acquire affordable health coverage for its employees.
Despite the high cost of premiums and the cost of administering the benefit, small employers state many important business reasons for offering health insurance coverage to its employees. Most say they provide health benefits because it helps with employee recruitment, increases employee loyalty, and decreases turnover. They also note that these benefits positively affect employee attitude, performance, and health. The most important reason for offering health insurance coverage, small employers say, is that "it is the right thing to do." The most significant reason for a small business employer's decision not to offer health benefits however is the skyrocketing costs.
So what can a small business employer do to maintain its health care coverage for its employees? Possibilities are reducing benefits, shifting more of the cost of the premiums to its employees, requiring employees to pay high co-payments when they visit a doctor, switching from a PPO to a HMO, and covering only employees rather than including family members. Higher deductibles and out-of-pocket expenses may be another
Healthcare system are employee sponsored insurance is not portable, overworked interns, residents, and nurses causing fatigue and burn out, and cost. Once an employee is no longer employed at an establishment he or she loses all health care benefits. This is such a disservice since the employee has paid into benefits and no longer has coverage (Goodman, 2016). Once the employee finds employee there is a period in which they are uninsured until benefits kick in. If anything happens during this time it is an out of pocket expense. Many healthcare workers are overworked causing fatigue and burn out. More staff could help relieve this problem. Lastly, the cost of healthcare is very expensive. In fact in the U.S. we pay more for healthcare than any other modern society. If we do not find solutions spiraling cost will bankrupt companies and force individuals to drop coverage, destroy long term viability of Medicare and Medicaid (Goodman,
What’s next? Some experts say that if the consumer-directed approach doesn’t succeed, em wash their hands of health care altogether. A recent study by the Employee Benefit Researc showed that the proportion of U.S. residents covered by employment-based health benefits d percent in 2000 to 60 percent in 2004. Decades from now, observers may conclude that a counter- revolution in employer coverage began in these early years of the 21st century. —Terence F. Shea
This paper discusses how the ACA has impacted the employer stakeholder group. Peer-reviewed journal articles will be examined to show how employers have been affected now and into the future, along with how employees are affected as well. Many mandates and changes have influenced and impacted employers in how they handle and deliver health care coverage, as well as impacting their business as well. Many changes affect large employers the most, but small to mid-size employers are also affected as well. This paper will also discuss commonly used strategies and their risks for employers to use in order to help lessen the impact of the ACA.
Employers should offer affordable( employee premium less than 9.5% of employee’s wages) and of minimum value( employers must pay at least 60% of insurance cost) healthcare benefits to their employees depending on factors like number of FTE, number of employees receiving premium tax credits and other complex measurements to calculate the amounts. Employers should also notify employees by written about State exchanges, and advise them that if an employee decides to purchase a health Plan through an exchange, they may lose the employers’
The National Federation of Independent Business (NFIB) agrees that the cost of health insurance is a high ranking concern for business owners. Every year, they conduct a study to see what the top general concerns facing small business owners. From the beginning of the fiscal year of 1986 to the present, every year has concluded that the cost of health insurance is the top burden facing small business owners in America. (Wade, Holly Pg 24, table 5). Another important factor to consider are lost capacity due to employee illnesses or unemployment. Brad Plumer of the Washington post recently did an interesting study to determine the amount of money lost due to inactivity at the workplace. Including businesses in both the public and private sectors, Plumer estimates that over $1.8 trillion dollars per year in lost productivity at the workplace. While the Post acknowledged the idea of lost productivity is not a clear science and can be overvalued this is nonetheless a huge amount of money wasted each year.
Individuals checkbooks are not the only place that is going to take swift punch to the gut. Small businesses -- having 50 or less employees -- are also going to take a brutal hit. Several plans provided by small businesses will have to be terminated unless they are changed so they meet all the needs of the new requirements of the Affordable Care Act. The American Enterprise Institute “estimated that as many as 100 million working Americans will lose their employer-sponsored insurance coverage”. Small businesses already are paying more for their health insurance now they are going to lose it all together. Small businesses who
For the purposes of the Affordable Care Act, any employer that has less than 50 employees is a small employer. There is no mandate for small employers to provide health insurance, however there are incentives available to make providing insurance easier and more affordable.
were already providing health insurance because we’re in a competitive market and that helps us to retain and recruit good employees,” the Sacramento-based small business owner said, . One benefit for small businesses are tax credits“For us it was just good business. But pretty quickly we saw that our firm could benefit from the law. What appealed to us about the ACA were the tax credits and other financial incentives” (Taylor, 3), “A tax credit is an amount of money a taxpayer is able to subtract from taxes owed to the government” (investopedia.com , 1). this is good because businesses that barely make any money don't have to pay much taxes and they can maybe get more popularity due to the money they are saving. This is one example of how the ACA helps Small Businesses since …“ObamaCare creates the Small Business Health Options Program or SHOP, a part of each State’s Health Insurance Marketplace, where small businesses with 50 full-time equivalent employees or fewer can shop for group health plans. Starting on November 15th, 2015 those with 100 full-timers or less can use the SHOP” (www.obamacarefacts.com ,2 ). Small businesses are not required to provide health insurance to their employees if they wish because “... the answer is no. Under the Affordable Care Act, businesses with fewer than 50 full-time equivalent employees are not required to provide health insurance to their employees, and those employers will not face tax penalties if they decide not to offer their employees health insurance” (resources.ehealthinsurance.com, 1).This is good that very small businesses have the freedom not to get insurance because some businesses need to save money because of the expensive previous health care. Despite it being affordable, ObamaCare has given the freedom for small businesses to not give healthcare to employees. “Since health insurance for small business isn’t mandatory under the ACA, small
Health care coverage can be obtained from many different sources. The most common source is through employer-based insurance. The coverage offered to employees through a group health plan can benefit the employees as well as the business. According to Small Business Majority (2017), purchasing a group policy will allow the employees to have better access to care, which results in healthier employees. In addition, being more affordable and having the sense that medical expenses would not be as expensive if they did not have insurance (Small Business Majority, 2017). Finally, tax benefits that businesses may receive for paying at least half of the employee's premiums, according to Small Business Majority (2017). These benefits assist in creating a healthier atmosphere in a business.
Health insurance is provided by Medicaid and Medicare to elderly and disabled people and poor children. People working for large companies receive health insurance through their employer. Unfortunately, people working for small businesses, those self-employed, and the working poor are left without options to purchase health insurance at an affordable cost. This creates a divide between the haves and have-nots in terms of health care. Those who have health insurance will access the care they need, but those who do not have insurance will go without. This may include primary care interventions such as immunizations and regular health screenings. Rising health care costs have a direct effect on the number of uninsured individuals and, therefore, a direct effect the number of individuals that can access care.
The health care system enforces a heavy "tax" on small businesses. Small businesses pay 18% more per worker than much larger firms for the same health insurance policy. These high cost are put on small firms and their employees which leads to lower wages making employees leave for better work forcing small businesses to shut down. This is bad for the communities
Small employers with predominately low-income employees may tend to opt out of small group markets because their employees will be better off with subsidized individual coverage.
The National Federation of Independent Business (NFIB) has repeatedly stated that the cost of health insurance is a high ranking concern for small business owners. Every year they conduct a study to see what the top general concerns facing small business owners. In each fiscal year since 1986 the cost of health insurance has been shown to be the top burden facing small business owners in America. (Wade, Holly Pg 24, table 5). Another important factor to consider are business which suffer from lost capacity due to employee illnesses or unemployment cost. Brad Plumer of the Washington Post recently conducted a study to determine the amount of money lost due to inactivity at the workplace. Including businesses in both the public and private sectors, Plumer estimates that over $1.8 trillion dollars per year in wasted each year as a result of lost productivity at the workplace (Plumer, Brad). While Mr. Plumer acknowledged the idea of lost productivity is not a clear science and can be overvalued this is nonetheless a huge amount of money wasted each year.
Solutions: Business health insurance is a major cost of doing business, especially for small companies as groceries. With premiums soaring, many small business owners are asking their employees to shoulder more of the financial burden or cutting benefits entirely. Grocery health insurance may take a huge chunk out of the revenue, but benefits often attract better employees and help retain existing workers. Satisfied, healthy employees are more likely to help your business grow. As a mediator that struggling to provide health insurance, the following solutions can reduce the small business health insurance benefits and costs.
Most health care analyst believes that health benefits provided by employers are provided as part of the overall compensation paid to workers. Because of the rising cost of the health care benefits, employers’ shares of