Should You Still Offer Health Insurance as a Benefit?
Workers and entrepreneurs are looking for answers about the health care law's uncertain future.
Many questions surround the future of former President Barack Obama's health care law, the Affordable Care Act. The most immediate is, “Will the insurance I bought during Open Enrollment work in 2017?” (Yes.) Others are more far-reaching, such as, “What happened to the health-insurance shopping utopia we were promised?” (Well, about that ...)
These issues obviously affect individuals, but they affect employers, too. Businesses that once might have planned to send employees to an individual marketplace for coverage now could be questioning whether they should continue (or even begin) offering health insurance as a benefit. If you're looking for answers, you'll find them only after you ask the right questions. Here are a few to pose, based on your company's current status.
Thinking about providing health insurance.
Many people take employer-provided health insurance for granted. But that doesn’t mean it’s a guaranteed benefit that every company should offer. If you’re on the fence about offering health insurance to your employees, you'll need to sort out some market-research details first.
How competitive is the market for talent in your space? Even in an age where employees hope for a work environment with office snacks, dog-friendly spaces and on-site masseuses, health insurance remains a go-to benefit. Even more telling, high-quality employees expect it. If talent is at a premium in your market and you’re competing for the best of the best, offering health insurance might be a no-brainer.
A robust health insurance offering as part of an employer-value proposition is key for many companies aiming to secure top talent. Candidates might judge a solid policy -- especially one that is low- or no-cost to them -- as a more attractive prospect than being sent to a health insurance exchange where they'll have to navigate options on their own.
What are peer companies doing? This is related to the first question. If you know you’re in a competitive market, the next step is figuring out the norms among your peers.
As a starting point, make sure your health insurance offering is comparable to that put in place by similar-sized companies in your industry. Why? Because prospective employees will compare benefits packages along with salaries and perks. No one job-hunts in a vacuum. Smart candidates will research company fundamentals and look for indicators of office culture. They'll also want to know which health insurance plans you offer and how those policies stack up against what they stand to gain from other companies vying for their employment.
How do you benchmark health insurance benefits against peer companies? First, simply check your competitors’ websites or LinkedIn profiles. Job listings and career pages almost always include a description of the core benefits package. It’s a handy way to see how you fare on the basics.
Second, ask your health insurance broker to provide some market intel. This route can get you info that’s a little more “inside baseball,” with a greater degree of specifics. This is particularly helpful if you need something beyond the broad strokes you're likely to find in public-facing sources.
Finally, you can use government data such as resources available through the Department of Health and Human Services (HHS). The agency's Medical Expenditure Panel Survey is touted as “the most complete source of data on the cost and use of health care and health insurance coverage.” You can filter results by state, industry and company size to narrow the field for an apples-to-apples comparison.
Already provide health insurance.
Maybe you already offer health insurance and you’re deciding where to go from here. Your questions naturally will focus on how changes to your existing coverage will affect your bottom line, but don't forget to factor in employees' perception of the value they're really receiving from that benefits package.
Will you see big changes compared to your current offering? If you believe employees might perceive the changes you're considering as a downgrade -- fewer benefits, a more restrictive network, higher costs -- tread carefully. Humans suffer from a little thing called the endowment effect: Essentially, people don’t want to lose what they’ve already been given. It's critical you manage their expectations. That means not offering something great until you know you can provide it. The last thing you want to do is roll back benefits because you didn't plan accordingly. If it's too late and that's where you find yourself, it's time to manage your own expectations: You're going to get some blowback, and you need to be able to handle it tactfully and honestly.
Of course, providing something better is ... also dangerous territory, actually. Again, it’s about managing expectations. This is true for employees as well as for the business as a whole. You may want to provide the best health insurance possible, but you must be assured you can sustain that level as a company. If you overpromise and stretch to deliver what you've sold, you'll eventually find yourself needing to downgrade. (If you read the preceding paragraph, you know that's not where you want to be.)
Directing employees to health insurance exchanges.
If you believe it’s best for your business and your employees to ask workers to shop for policies through a health insurance exchange, you're not completely out of the woods. You're still a resource for your team, and you need to be ready for the questions heading your way.
Would you be better off getting a group plan from the exchange? You don’t have to send your employees out solo. Some small-business owners think health insurance is too expensive to maintain. But if you have fewer than 25 employees, you may qualify for a Small Business Health Care Tax Credit that’s worth up to 50 percent of your premium costs. This can be a cost-effective option, so it pays to vet your eligibility before you entirely write off employer-paid health benefits.
How robust is the exchange's offering in your market? In some states, only one or two carriers are available to people shopping on government exchanges. Your employees might not appreciate the limited choices they'll find once they start shopping. Examine whether you could give them better options with a group plan, and consult your health insurance broker to run through all the realistic scenarios.
Who are your employees? Does your current group of workers qualify for marketplace subsidies? HHS announced that 2.5 million people were eligible for subsidies in government marketplaces but weren't taking advantage of them. If most of your employees would qualify, they could get coverage for less out-of-pocket than they would spend if they contributed to a group plan. This presents a great opportunity to direct them to the marketplace. Make sure you communicate the potential savings, and let them know you've considered their individual situations as you made this decision. You don't want them to think you’re pushing them away. Show them how to take advantage of subsidies and save money for their households.
Are you ready for (potentially) lots of questions and concerns? We’ve gone through several questions here, but you should be ready for more from your employees -- no matter which path you choose. Realistically, workers and entrepreneurs won’t see sweeping changes to health insurance in 2017, but it’s still a hot topic. President Donald Trump and leading Republican lawmakers have made it a core issue, and that could lead to employee anxiety. Be prepared to work through concerns that arise during this transition, and understand you'll have to provide additional support if you send them to find their own plans on the exchange.