Small Businesses May Soon See More Health Insurance Options

The Affordable Care Act has dramatically changed many aspects of the healthcare industry as well as businesses in general. However, it seems that one result of the law is that the way in which smaller companies in particular is that it may eventually afford them far more options for covering their employees going forward.

Many health insurance companies may soon recognize that there’s a major chance for themselves to succeed in the burgeoning small business coverage market, according to a report from Zane Benefits. Today, the nation’s 5.7 million small businesses – those with fewer than 50 employees – make up 77 percent of all employers in the U.S., and while they are not required under the ACA to provide their workers with coverage, many will likely do so anyway as a means of being more competitive with their larger counterparts for the best workers available to them.

Interestingly, though, nearly two in five small or medium-sized businesses (those with 199 employees or fewer) did not offer their employees any sort of health insurance in 2012, compared with just 2 percent of those with 200 or more employees, the report said. That comes to more than 2.3 million such companies not granting their workers the ability to obtain coverage. The reasons why this is the case, though, should be obvious: Larger companies have the ability to keep their insurance costs low on a per-person basis because of the bulk in which they can buy coverage. Smaller competitors, with their fewer employees limiting their ability to buy large amounts of coverage all at once, also likely operate on thinner margins and therefore cannot afford to provide them with health insurance.

The cost of health insurance was cited by 61 percent of small business owners as being the reason they don’t offer such options to their employees, the report said. Further, as many as 27 percent who do not offer it have done so at some point in the last five years, indicating that they may have been priced out of the market.

Owners worried about compliance with the ACA or who simply want to give their employees more options may want to reduce their other small business insurance costs as a means of getting there. For instance, cutting costs for workers’ compensation and liability insurance could free up thousands of dollars per year that can then be devoted to health coverage instead.