5 Key Trends In the Small Business Health Insurance Market For 2016

With major provisions of healthcare reform brought about by the Affordable Care Act (ACA), there can be no doubt the landscape of small business health insurance is rapidly changing. The premiums being charged for group health coverage are outpacing inflation and most employers are feeling the pressure of rising health care costs.

It is clear that smaller employers are facing a heavier burden. Let’s look at 5 key trends in the small business group health insurance market that can affect the business landscape in 2016.

1. Only 54% of small businesses offer health insurance.

The number of small employers with less than 50 employees who offer group health insurance coverage is steadily declining. According to the Kaiser/HRET 2015 Employer Health Benefits Survey, only 54 percent of small businesses with less than 50 employees offer any type of traditional group health insurance whereas 97 percent of employers with over 100 employees offer group health insurance.

2. Many small groups remain in non-ACA-compliant plans.

There are basically two different non-ACA compliant plans:

1. “grandfathered”
2. “grandmothered”

Grandfathered plans are those plans that were in existence prior to March 23, 1010, the date the ACA became law. These plans can stay in place as long as no significant changes that reduce benefits or increase employee costs are made.

Grandmothered plans were transitional plans intended to provide a grace period before transitioning to ACA compliant coverage. These plans can remain in force until 2017.

3. Turn to multiple strategies to control costs.

Many small employers are considering ways to save on group health care costs, while still protecting their workforce. These strategies include:

• High-deductible health plans tied to health savings accounts (HSAs)

• Cutting back on spouse benefits who have access through their own employer

• Establishing ways to keep providers and employees accountable for health outcomes

Most small businesses indicate that controlling costs is always a top priority and they are looking to rein in costs whenever possible.

4. Employer-funded individual health insurance.

Due to the unsustainable cost of employer-sponsored group health insurance benefits and the advantages of individual health insurance policies, many employers will eliminate employer sponsored health insurance by 2017.

Health care reform is causing small businesses to look for more cost-effective ways to offer health benefits and defined benefit plans are being replaced by defined contribution health plans. Instead of paying the direct cost of health insurance, many small businesses will shift to giving each employee a fixed annual healthcare allowance to obtain individual health insurance policies.

5. Wellness programs and nurse hotlines.

There’s no doubt, healthy employees are more productive, reduce insurance claims, and low group insurance costs. Many small businesses are offering gym memberships, host health screenings, and provide access to nutrition advice and meal-planning tools to keep their employees healthy. Many times these features are offered through a health insurance provider and only cost a few dollars per employee to implement.

The most expensive healthcare costs are emergency room and urgent care visits. By implementing a nurse hotline program, employees with only minor medical issues can speak to a nurse 24 hours a day. These nurses won’t take the place of a primary care physician but can be helpful in determining the most appropriate level of care. Nurses will assess the situation to help decide if a trip to the emergency room is necessary.

We are in the middle of a major transformation in how businesses and employees purchase health insurance to protect themselves and their families. Small businesses are taking the lead by transitioning to individual health insurance and premium reimbursement programs.

But that doesn’t necessarily mean that is the solution for your company. Talk to one of our business insurance experts today to determine a group health insurance option for your employees that won’t break your bank.