Editor’s Note: As of 5/26/2016 InHealth Ohio is being liquidated by the Ohio Department of Insurance. More information is available here.
In part one of a small business owner and entrepreneur’s guide to healthcare, we discussed the legal obligations of providing insurance, and what to do if you are an individual seeking coverage. In part two, we’ll discuss what providing benefits looks like for small business owners today, and trends that will continue to change the industry.
Small Businesses: Traditional Policies vs. Allowances
There’s generally one of three ways insurance can go when talking small business – no insurance, a traditional small group policy, or defined contributions and allowances. As healthcare costs rise, more businesses are moving away from group policies and into allowances. Benefits are a powerful tool for attracting and retaining employees, and employers are doing what they can to ensure insurance options remain. However, there is one important caveat to simply offering employees help paying for their own policies.
“If I were your employer I could not allow you to go to the individual health insurance market and reimburse you or pay for those premiums directly, on or off exchange,” O’Brien says. “You see some small employers not offering group insurance paying FICA/payroll taxes giving them extra salary per year based on the cost of their insurance. Just like a raise. They want to give them something instead of nothing.”
Thomas says an increasing number of employers have adopted the allowance or defined contribution mindset. This comes with some interesting potential benefits for business owners and employees alike.
With premiums constantly on the rise, it’s a way to control costs. As O’Brien points out, if a premium rises 25 percent at renewal across their entire workforce, where is the room for that in the budget? Allowances help a business know exactly what their expenses will be.
Allowances also eliminate the need for an HR department to get involved or be benefits experts. HR, in general, is often at a luxury for small employers.
Seeking individual insurance does have some benefits to employees as well. First, they are able to find a policy that better fits their needs, as most group policy plans offer a limited number of options. Insurance plans are not one size fits all. Should an employee choose to leave, while they would no longer have help covering premium costs, their policy would also travel with them.
Takeaway: Many employers are turning to allowances or defined contributions towards health insurance to maintain attractive benefits, but make sure you are doing so legally.
Trends
With the cost of healthcare on the rise, the industry is responding with a number of trends that help consumers stretch their dollar.
O’Brien recommends the AAA-like coverage of Columbus healthcare startup Ardina.
“Ardina is a great retention tool,” he says. “Ardina pairs so well with where the market is going.”
About 60 percent of his younger-generation clients are using the tool as an insurance supplement. Whether offered by the employer or sought out by an individual, for an extra $10 or $20 per month depending on the plan, Ardina gives members access to telemedicine services as well as dental and vision discounts.
Telemedicine is emerging as a solution to high premiums on individual policies when it comes to common health issues. The quick and more convenient way to chat with a doctor saves patients time and money. Although it may be more cost-effective, telemedicine services generally don’t credit a deductible.
O’Brien says that for the first time in history, telehealth doctor visits matched primary care visits last year.
“You see a lot of retail shift,” he says.
He’s also seeing a rise of delivery doctors who come to a patient’s house for a predetermined amount of money. However, again, the service doesn’t credit a deductible.
These pieces paint an introduction to the complex world that is healthcare. By working with a broker, many individuals can find plans and options that are better-suited to their needs and budgets rather than just settling for what’s on the exchange.
For more information on InHealth Ohio, visit inhealthohio.org. For more information on Mosaic Employee Benefits, visit mosaicemployeebenefits.com.
