During the policy formation process of the ACA, small business advocacy organizations, associations, and small business owners felt excluded from the process. The result of which was not only a deep-seated skepticism of the law, but legitimate concerns that the law did not do enough to address their needs. The energy and uncertainty surrounding the future of the law is an opportunity for small business stakeholders to make their voices heard and gain a long-awaited seat at the table as a way forward.
On February 7th, the House Small Business Committee led a hearing to do just that, calling upon health policy experts, the National Small Business Association (NSBA), The National Association for the Self Employed (NASE), and the National Federation of Independent Business (NFIB). The conclusions from the hearing clearly stated what small businesses want from the new administration: affordability, flexibility, and predictability of health care and coverage.
For brokers, emphasizing affordability, flexibility, and predictability in conversations with clients is an opportunity to address the needs of small business owners that are otherwise not addressed by the administration.
It’s no secret — cost remains the top cited reason why small businesses do not offer health coverage to their employees. This was true before the ACA, during the implementation of ACA, and now years after it.
In its current state, major medical small group plans are far from an attainable reality for the majority of small businesses and their employees. Per the NFIB, of the 60 percent of small businesses not offering health coverage to their employees, 52 percent said the cost of coverage itself was the deciding factor. This, coupled with the cost of complying with coverage legislation, like the ACA, makes offering the benefit all the more unattractive.
For brokers to ensure client retention and keep clients happy year over year, this is the sticking point: shop coverage options that are more affordable to the small businesses owner. Show clients that there are often additional cost savings options for employees and sustainable methods of providing affordable coverage.
Make no mistake, the ACA has effectively covered more Americans than ever before. It has reduced coverage discrimination, worked towards stabilizing health care costs, spurred industry innovation, and placed regulatory guardrails enhancing the quality of health coverage. Yet much, if not most, of these positives directly benefited those in the individual market, a market that small businesses have been wary of taking advantage of.
Small businesses are looking for a better way of taking advantage of the individual market for their employees. Per the NFIB, in 2015, 16 percent of small businesses attempted to do just that by helping pay for individual plans of their employees, and under the ACA, were penalized for it. Additionally, little was done to assist those contracted or self-employed benefit from the tax advantages of employer sponsored insurance. This, compounded with the regulatory compliance headache, left many small businesses wavering in the new health insurance landscape.
Flexibility, as small business stakeholders see it, comes with new models for cost-sharing. A good place for brokers to start? Section 18001 of the 21st Century Cures Act allows employers with less than 50 full-time employees to fund HRAs to pay for out-of-pocket medical costs and premiums for coverage purchased on the individual market, encouraging flexibility for small business employers to choose between the group market or the individual market, both in a tax-advantaged way.
Another side effect of what many small business owners viewed as convoluted legislation was confusion. Per the NSBA, 14 percent of small business owners spend more than 20 hours a month on federal regulations, noting the ACA as one of the most burdensome. Many were left feeling unsure of their compliance with the law, and also unsure of how to take advantage of it. The Small Business Tax Credit was one such example that small businesses felt was not simple nor broad enough to take full advantage of.
For brokers, this means providing increased transparency to small business owners onto their coverage options year over year, and taking the time to sit down and explain existing and upcoming legislation.
By prioritizing affordability, flexibility, and predictability of health care and coverage, brokers can be a bigger part of the solution in reducing the current barriers preventing mass entry into the health insurance market.