Small and medium-sized businesses are a large driving force in the U.S.’s economy. And though over half of the approximate 7.4 million employers in the country have fewer than 200 employees, did you know 2.7 million small and medium-sized businesses do not offer health insurance?
This alarming statistic begs the question: Should you be concerned that over a third of small and medium-sized businesses employees offer no health insurance? It’s certainly something you should be aware of as a small business owner. In this article, we’ll address why many small businesses are not offering health insurance and what the solution is.
Currently, there are approximately 7.4 million employers in the U.S. The majority are micro and small businesses, with 82 percent that have fewer than 200 employees and 62 percent that are fewer than ten employees.
While small and medium sized businesses are the majority of our nation’s workforce, they are much less likely to offer health insurance. In fact, only 54 percent of all small and medium sized employers (with less than 200 employees) offer traditional health insurance to employees; compare this to 98 percent of large employers who offer health insurance to employees.
The smaller the business, the less likely you are to offer health insurance. Of employers with less than ten employees, only 44 percent offer health insurance today.
So, why do so few smaller businesses offer health insurance? Cost.
There’s a reason millions of small businesses aren’t offering health insurance to their employees – cost. The fact is, employer-sponsored group health insurance has become very difficult for small business owners to afford. From 1999 to 2014 average annual costs for single coverage have increased greatly from $2,196 per employee to $6,025, respectively. Most small businesses over the years have dropped coverage because they simply could not afford it any longer.
This trend is evidence that small businesses need more affordable and sustainable health insurance solutions. Additionally, if you haven't been able to afford employer-sponsored group health insurance, or do not believe it is the best way to insure employees, you are not alone.
Is there a solution? Without a doubt: individual health insurance.
How is individual health insurance the solution for small and medium-sized businesses to offer health insurance? Individual health insurance plans are designed to be an alternative to employer-sponsored group health insurance.
Individual health insurance is the way for small and medium-sized businesses to provide affordable and reliable healthcare to your employees. Individual health insurance is:
Portable
Half the cost of employer-sponsored group health insurance
Customizable
Dependable
To make individual health insurance more like a familiar group plan for employees, many small business owners incorporate a Premium Reimbursement Plan (PRP) like an HRA. This plan allows you to reimburse your employees, tax free, for their individual health insurance premiums and is common amongst small business owners. And recently, the IRS is working to make health benefits, such as PRPs, more accessible to small business owners.
Small business owners enjoy PRPs because they allow them to control costs, provide health benefits to recruit and retain, have access to quality healthcare that is as good and in some cases better than employer-sponsored group health insurance, and are often tax deductible for small businesses.
Health insurance is an essential benefit to both your small business and your employees. And though nearly three million small and medium-sized businesses do not offer health insurance, you do not have to be one of them. Premium Reimbursement Plans are a means for small business employers to provide quality healthcare benefits to employees and provide them with the coverage they need.