Making Sense of Small Business Health Insurance

When Marcus Newman, Vice President of GCG Financial, asked, “who has a company mission statement?”, every hand in the room went up. Then when he asked, “who considers their mission statement when deciding what benefits to offer to their employees?”, only two hands raised. The responses to these questions are very telling and reveal why employers tend to get caught up on the cost vs. quality of benefits and health insurance. As business owners, are we walking the walk when it comes to benefits?

History of Health Insurance  

Businesses first started, for the most part, offering health insurance and other non-pay options as benefits in the 1970’s after the government issued a wage freeze. In today’s market, employees have come to expect health insurance as being part of an employment package.

But why do we need a health plan? What’s the point of offering insurance to our employees? The answer is simple. Not only is it a great way to attract potential employees, but it’s an excellent way to retain employees and build their loyalty to your organization. Plus, healthy employees are more productive!

The Affordable Care Act’s Impact

In 2010, the Affordable Care Act was introduced and made insurance available to everyone that didn’t have it before. How? Medical underwriting was removed and a “GUARANTEED” issue environment was created. For Illinois small businesses this wasn’t a major change, but it was revolutionary to individuals.

The reason that Illinois small businesses were not shocked by this change is because in 2002, Illinois passed the Small Employers Health Insurance Rating Act (SEHIRA). This law made small group (under 50 employees) health insurance guaranteed issue eight years before the ACA. Therefore, while the ACA is responsible for some major cost increases over the past seven years, it has not been as much of a burden in Illinois as it has been in other states (at least regarding small business).

However, the impact on individuals made a big difference because it gave them the opportunity to purchase their own health insurance if they are unemployed or their organization does not offer it.

Considerations When Shopping for Health Insurance:

• Start shopping 90 days prior to your renewal date. For small businesses, quarterly rates are published early so people know two months beforehand what rates will be.
• Get started early on a market analysis to give yourself plenty of time to consider the best option for you and your team, whether that’s keeping your current carrier or switching to a new one.
• Educate your employees on the "Hidden Paycheck". Employees should understand the cost of the employer’s contribution of their benefits.
• Today, insurance costs more than it ever did before. Save costs by offering an HMO instead of a PPO.
  • HMO is perceived as the lesser option, but it’s a great way to save costs for you and your employees.
  • We can change the perception of HMO and give it a more accurate reputation by educating our employees.

Education is Key

By the end of our discussion, an emerging theme arose – education is key. The simple act of communication can easily fall through the cracks, but we can’t forget its importance. Communicating options to your employees and taking the time to educate them on what their benefits and choices are will alleviate the confusion and clarify employee’s expectations.

For any questions regarding health insurance, please contact Marcus Newman at marcus.newman@gcgfinancial.com or call (847) 457-3058.

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