Running a small business in 2020 was probably a roller coaster you don’t care to ride ever again. It’s been tough as many business owners have been forced to make cuts and downsize. As you re-examine your operational costs, you’ll no doubt be taking a hard look at healthcare expenses for yourself and your employees. A lot has changed in the benefits and healthcare industries. Today, we thought it would be helpful to talk about what’s new this year in terms of healthcare and small business. Before you make official decisions, here are some changes for 2021 to consider.
Official Changes in 2021
The business and economic landscape have changed significantly over the last 12 months. And along with it, small business priorities and budgets have changed, too. Healthcare is the hot topic as the country re-emerges from the effects of the pandemic. As you carve out your health and benefits strategies, you’ll likely focus on your costs and staff. But you’ll also want to know what’s new for the Affordable Care Act with a new administration and look for ways to leverage any benefits the government is extending to businesses and individuals alike.
The Biden Effect
When President Joe Biden was campaigning, he often talked about his plans to reform the ACA into a better version he called Bidencare. Now that he’s in office, there are a few aspects to the marketplace that may see improvements. Under his plan, which some are calling the “Affordable Care Act 2.0,” the exchanges would essentially function the same. But Americans would be able to also choose their private insurance providers and see greater premium tax credits for affordability. The income benchmarks for eligibility will likely also see adjustments, making subsidy plans more accessible.
A Sharper Focus on the ACA
Before the pandemic, the Affordable Care Act was already getting attention from the former administration looking to dismantle some of its parts. For example, the penalties for not carrying coverage were removed. But now, as Americans have spent the last year coping with and trying to avoid an incurable disease, healthcare is at the top of everyone’s priority list. Government officials and the various agencies involved in managing the ACA are extending certain deadlines for insurance providers and offering more paths to affordable healthcare for businesses and individuals. With so many unemployed and struggling small businesses forced to shutter, healthcare affordability and availability need to adjust.
Some small businesses are struggling to keep their doors open and to make payroll. And when it comes to cutting costs, business owners are getting creative. But one operational expense that is getting prioritized is employer-sponsored healthcare. Traditional group plans of years past are proving to be too costly for many companies. But cutting healthcare benefits is not an option, especially when those companies are still looking for ways to operate with healthy staff. With so much attention on health solutions for businesses, the insurance landscape has adapted.
Small Business Trends in 2021
There has been a dynamic shift in priorities among small businesses. Health insurance for the employees doesn’t have to be the expensive juggernaut of a benefit to manage. There are some emerging trends demonstrating that small business owners are finding a path through the noisy health and wellness benefits space to find affordable and practical solutions for their teams.
One of the most significant shifts is the small business adoption of the various health reimbursement arrangements (HRAs) now available. These newly available platforms are designed to meet different business budgets, types, and needs, too. Many are customizable allowing small businesses to develop an employee health platform that fits the budget. And because affordability matters, thousands of businesses are exploring their options with qualified small employer health reimbursements (QSEHRAs,) individual coverage health reimbursement arrangements (ICHRAs,) and excepted benefit health reimbursement arrangements (EBHRAs.)
The ICHRA Boom
The ICHRA became available in 2020, and it couldn’t have come at a better time. Businesses jumped on this opportunity to leverage its many employer-sponsored health insurance benefits. Instead of the traditional group plans with lofty premiums, the ICHRA would function like a reimbursement platform dictated by the small business budget parameters and guidelines. Employees would purchase their own insurance plans via the marketplace and then submit receipts of healthcare costs for reimbursements from their employers. The ICHRA addresses the small business compliance aspect of offering health insurance benefits. It allows businesses to control the costs of employee benefits. It works with any company structure with 50 or fewer staff members, and various employment types are eligible to participate, as well.
A Variety of Health Insurance Models
Small businesses are also finding solutions to their health benefits costs with hybrid and other insurance models. Some are able to keep their group plans for some full-time employees and still offer an HRA to part-time, seasonal, or temporary staff. Those who opt for an HRA variation can also tap into the premium-only cafeteria plans that enable employees to pay some or all of the premiums on a pre-tax basis.
Predictions for the Rest of the Year
What can small businesses expect for the rest of the year? The crystal ball isn’t clear, but there are some predictions that might help guide your decisions moving forward. Based on what many companies are doing now and the anticipated relief of the pandemic restrictions for many parts of the country, there may be a light at the end of the health insurance affordability tunnel.
HRAs May Dominate
Most industry experts are expecting the HRA model to continue to dominate. Small businesses are seeing real results with the various HRA platforms. Companies are alleviating HR burdens and health insurance benefits costs in a big way. And employees seem to almost prefer the HRAs because it allows them to select the insurance plan of their choice on the exchanges. Small businesses meet their mandates and control their costs while employees get to pick an affordable plan and be reimbursed for out-of-pocket expenses. It’s a true win-win.
Health & Wellness Benefits
Your small business won’t succeed if your employees aren’t healthy. Keeping everyone safe and focusing on health wellness will continue to be a trend in the months to come. Companies will look for ways to accommodate employees with pre-existing conditions and explore remote working options whenever possible. Offices, shops, and workplace environments will likely continue to embrace social distancing and mask practices to reduce adverse health risks. Expect to see small businesses define their new normal of operations around these health and wellness priorities.
Small Businesses Will Look for Partners
As a small business owner or CEO navigating the new health insurance landscape, you’ll likely be looking for partners to help you execute new benefits plans. The old ways of relying on an insurance broker to auto-renew your group plan are over. Today’s companies, large and small, need affordable and realistic solutions in this new normal. Whether it’s a third-party administrator, like W3ll, to help you enroll and develop an ICHRA platform or a dedicated administrator to explore the latest available plans and mandates, small businesses won’t be tackling health and wellness alone.
To learn more about options as a small business exploring health benefits options in 2021, contact W3ll. We can help you create a mandate-meeting plan that benefits your entire teams and your bottom line.