By Ben Kinsey, CPA
|Image courtesy Blue Diamond Gallery|
It’s been said that the only things in life that are guaranteed are death and taxes. Well, I’d like to add another codicil to that tenet called Healthcare Reform. I say this because ever since the so-called Affordable Care Act was signed into law back in 2010, it has been kicked around like the mother of all political footballs. Even as 2019 had barely begun, US District Court Judge Reed O’Conner declared the ACA unlawful. He ruled the mandate requiring the American public to buy health insurance was unconstitutional. Back in 2012, the Supreme Court ruled that the law fell under the Senate’s taxation powers, rendering it constitutional. As the football and the buck is being passed back and forth while the issue is being decided by the Fifth Circuit Court of Appeals. I thought I’d take the time to write about what’s in store for businesses in the coming year.
Healthcare Spending by Businesses will Increase
Big surprise there, right. Ever since the ACA was enacted, the costs to employers and employees has steadily risen. The only question is how much. A report on healthcare benefit trends notes that while costs to employers rose on average 3.6% in 2018, they are expected to rise by 4% in 2019. The report also points out that even those figures don’t show the true increases faced by small businesses, since employers with less than 500 employees reported their costs increasing by more than 10% in 2018. This forced many smaller employers to do such things as increase PPO deductibles to keep their health costs from skyrocketing.
Why are Small Businesses Feeling the Pinch?
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When it comes to buying power, big businesses have it and smaller firms don’t. This means organizations with less than 10,000 employees are going to be required to spend more for healthcare than big multinational corporations. As a result, many small businesses are offering employees currently on traditional PPO plans the option of switching to consumer-driven health plans (CDHPs). The reason they do this is obvious when you compare the cost. High-deductible CDHPs cost an average of 13% less than comparable PPOs. The other popular alternative is for smaller employers to join professional employer organizations in order to leverage the buying power usually reserved for much larger businesses.
Is there a Doctor in the Mouse?
Another way in which small employers are trying to offset rising healthcare costs is by leveraging technology. Offering employees access to such things as telemedicine, interactive condition monitoring, and other hi-tech solutions designed to target health issues like diabetes can help keep employees healthier which reduces the number of times they choose to go to the doctor’s office. Online health education and other preventative medical alternatives have also been proven to be a way to lower costs without eroding benefits.
Can You Negotiate Your Way to a Cure?
The problem with most small business owners is they believe when their annual premium arrives, that’s all she wrote. Instead of spending a lot of time searching for more affordable solutions, they simply bite the bullet and pay up since they don’t believe that have much of a choice. Even worse, the insurers themselves think nothing of bullying small employers into accepting rising costs, especially if their workforce is aging or the firm processed a number of large healthcare claims the previous year. What these employers don’t realize is unless their healthcare insurance broker points out to the insurer factors that can mitigate these liabilities, the writing is on the wall. If your company has been successful at keeping your employees healthy or some of your more mature employees have retired, don’t expect the insurance company to point these out to you. That’s when you need your insurance broker to go to bat for you.
SHOP til You Drop
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The federal government has a way for smaller businesses to shop for better healthcare options. In fact, the program is called SHOP, which stands for the Small-Business Health Options Program. The program is designed for small businesses with 50 or less full-time employees. (Those with 25 or less employees who opt for SHOP, may even qualify for the Small Business health Care Tax Credit.) What’s even better about SHOP is you don’t have to shop alone. That’s because the feds also allows you to shop the program through a SHOP-registered agent or broker. Some of the benefits of SHOP are:
1. You control the coverage and the cost.
2. You get to choose from a number of private health insurance plans.
3. You may opt for health-only or add dental coverage as well.
4. You can start coverage for your employees at any time of year.
The only other requirement to shop your insurance with this program is that at least 70% of your employees must opt for SHOP and you must have an office or employee work site in the state whose SHOP you want to use. For more information on SHOP, clock on the link below.
The bottom line if you wish to keep both your employees and your business healthy, is you need to roll up your sleeves to dig into the health options available to help you find the plan that best fits your needs. Or, at lease you do until the powers that be step back to punt this particular political football down the field again in 2020.
Ben Kinsey, CPA of Small Business Group works with owners of closely held corporations in the Northeast Florida region. If you work in the North Florida area we offer a FREE initial Consultation at our office, please contact Small Business Group if you would like to know more about strategies for your business.