Although the energy that charged the Republican led government to prioritize the repeal and replacement of the Affordable Care Act (ACA) has been met with more questions than answers, make no mistake: change is on its way.
For many small business owners, this is welcomed change. During the policy formation process of the ACA, small business advocacy organizations, associations, and small business owners themselves felt excluded from the process. The result of which was not only a deep-seated skepticism of the law, but legitimate concerns that the law did not do enough to address their needs. The energy and unknown surrounding the future of the law is an opportunity for these small business stakeholders to make their voices heard and gain a long-awaited seat at the table in a way forward.
On February 7th, the House Small Business Committee led a hearing to do just that calling upon health policy experts, the National Small Business Association (NSBA), The National Association for the Self Employed (NASE), and the National Federation of Independent Business (NFIB). The conclusions from the hearing clearly stated what small businesses want from the new administration: affordability, flexibility, and predictability of health care and coverage.
Cost remains the top cited reason why small businesses do not offer health coverage to their employees. This was true before the ACA, during the implementation of ACA, and now years after it. This unwavering historical truth points to the looming problem the ACA and the insurance market itself stepped away from addressing: if America’s health care delivery system through an employer is both efficient and effective means to covering the population, we are ignoring the largest source of employment to reach this goal.
In its current state, major medical small group plans are far from an attainable reality for the majority of small businesses. Per the NFIB, of the 60% of small businesses not offering health coverage to their employees, 52% said the cost of coverage itself was the deciding factor. This coupled with the cost of complying with coverage legislation, like the ACA, makes offering the benefit all the more unattractive.
If the industry really wants to move the needle on small group health insurance, this is the sticking point: make coverage options more affordable to the small businesses owner, and give them additional cost saving options, or less volatility in year over year premiums, to sustain it.
Make no mistake, the ACA has effectively covered more American’s than ever before, reduced coverage discrimination, worked towards stabilizing health care costs, spurred industry innovation, and placed regulatory guardrails enhancing the quality of health coverage. Yet much, if not most, of these positives directly benefited those in the individual market, a market that small businesses have been inhibited in taking advantage of.
What small businesses are looking for are a better way of taking advantage of the individual market for their employees. Per the NFIB, in 2015, 16% of small businesses attempted to do just that by helping pay for individual plans of their employees, and under the ACA, were penalized for it. Additionally, little was done to assist those contracted or self-employed benefit from the tax advantages of employer sponsored insurance. This compounded with the regulatory compliance headache left many small businesses wavering in the new health insurance landscape.
Flexibility, as small business stakeholders see it, comes as innovation in the insurance market. New models for cost-sharing, like Section 18001 of the 21st Century Cures Act’s approach to HRA’s was cited as a direct example of this, with hopes of more to come.
Another side effect of what many small business owners viewed as convoluted legislation was confusion. Per the NSBA, 14% of small business owners spend more than 20 hours a month on federal regulations, noting the ACA as one of the most burdensome. Many were left feeling not only unsure of their compliance with the law, but also unsure of how to take advantage of it. The Small Business Tax Credit was one such example that small businesses felt was not simple nor broad enough to take full advantage of.
The confusion for small businesses owners was not aided in the fact that their current health plans were being “grandfathered,” their premiums were still greatly rising now along with deductibles, and they were unable to gain transparency into health care costs for themselves and their employees. This uncertainty stifled the growth in the small group market despite the ACA’s opposing intention with the inclusion of SHOP, the small business tax credit, and leaving small businesses without a coverage mandate.
For the small business owner, predictability comes in two forms: increased transparency to health care costs year over year and less convoluted legislation.
By prioritizing affordability, flexibility, and predictability of health care and coverage, small business are looking to be part of the solution in reducing the current barriers preventing mass entry into the health insurance market. And it looks like the new administration is listening.
We’re sure you’ve heard of Zenefits. We’re also certain that what you’ve heard follows a narrative of lessons learned from the rise and fall of this unicorn, once lauded for its innovative technology in a paper driven insurance industry. Industry brokers, who felt the most threatened by Zenefits, were also the most outspoken on the errors made by the company. Although brokers have rightfully expressed how shortcuts cannot be made in such a complex industry, they have wrongfully forgotten how Zenefits paved the way for needed innovation.
Before brokers were pointing out Zenefits’ errors, they were fearing its success. Zenefits provides a solution to a problem in an industry that was previously void of disruption. By streamlining the arduous task of employee benefits management, Zenefits provides the accessibility and transparency that businesses had long been searching for. Additionally, their tools gives employer groups their time back, freeing them from administrative complexities to focus more on their business. Employee groups were not only expecting more from their brokers, they were ready for technological solutions.
These technological solutions are nothing to be feared, and they are far from signaling an end to the broker industry. In fact, technology is working to solve the biggest pain points of the health insurance industry, including those of brokers. And, despite its missteps, there are lessons to be learned from a disruptor like Zenefits:
1. Give small businesses their time back
The core of Zenefits business was taking the administrative burden off the shoulders of small business owners and simplifying the vast complexities of insurance. By nearly automating human resources, small businesses saved time and hassle. Brokers must do the same for their clients. Employers want to deal with brokers in the most efficient way to understand their insurance options. Streamlining the process itself helps employer groups effectively do that and make a faster decision- saving them, and their brokers, valuable time.
2. Tout your expertise and (free) service
Perhaps the largest value added to small businesses of the Zenefits model is that the software was provided to them at no cost. For small businesses, saving on overhead expenses is an enormous value add. Brokers must find innovative ways to highlight the free value add they provide their small business clients if they expect to keep them. For brokers, the value add is clear: small businesses gain an expert business advisor to support their insurance needs.
3. Invest in technology
The complexities of streamlining benefits for small businesses go further than time and regulation. Outdated technology has forced employers and brokers into needless paperwork, faxing, spreadsheeting, and juggling multiple systems simultaneously to understand and obtain the best insurance option for their group. Technology is an effective solution that simplifies insurance administration at the click of a button.
In insurance, where the role of the broker is essential, technology provides the access point to improve the process brokers and their small business clients want. And its adoption is what makes insurance more approachable and convenient. Now more than ever, employers are expecting it.
Identifying why Zenefits grew so large so quickly in the first place comes with the recognition of the value it brings to an industry ripe for innovation. Brokers must embrace the role Zenefits and similar insurance disrupters play in the changing landscape, and adopt the latest technologies to stay ahead of client’s needs. While technology will never replace the brokers mastery of regulation, carrier offerings, and inside industry trends, it will elevate the role of the broker business in the eyes of the industry, small business clients, and the technology disrupters to come.
This article was originally published in BenefitsPRO’s Broker Innovation Lab.
Another open enrollment is winding down, an annual tradition allowing consumers to comparatively shop and enroll in the health plan that’s right for them. According to a recent New York Times article, roughly 20 million more Americans have health insurance now than when the Affordable Care Act (ACA) passed into law in 2010. Despite these gains, there were still 24 million adults without coverage at the start of this year’s open enrollment period. Three groups in particular stand out as populations that deserve increased attention as brokers work to cover those who are seemingly left behind.
Hispanics are more likely to be uninsured than any other ethnic or racial group, and Hispanic enrollment through health insurance marketplaces remains low. This persistent issue become even more important to address during open enrollment. Yet the solutions transcend ethnicity: neither technological nor language barriers appeared to be a large contributor to the coverage gaps. Instead, lack of understanding and communication about regulations drive the trend, particularly when it comes to both the financial penalty and tax subsidies on the individual market. This bridge in communication is where brokers shine. As the leading enrollment contractors for health insurance, brokers need to be on the front lines communicating to consumers the financial penalties associated with not having health insurance as well as tax subsidy eligibility.
The internet was invented 26 years ago, well before the average millennial was born. The reason why this matters so much in addressing the needs of the remaining uninsured is that the millennial generation makes up the majority of our workforce. This uninsured group has been coined with the name “young invincibles” which hints that they expect something different when it comes to their health and financial well-being. This generation expects convenience, affordability, and the best consumer experience, but they also lack an understanding of their health insurance options and its importance to both their health and finances. In order for brokers to successfully communicate and engage with this uninsured population, they need to meet them where they are: online. An online presence gives millennials the consumer experience they are looking for and can increase the number of communication touch points brokers can provide them.
Workers at small companies
Most workers who don’t have health insurance have jobs at small companies, with fewer than 25 employees. Those companies are exempt from the health law’s requirement that employers offer health insurance to their full-time workers or pay a fine. Yet the problem isn’t that small businesses are disinterested because of this policy; in fact, most small business owners are interested in providing coverage for their employees. The problem originates at its cost.
Small group premiums have long been known for being volatile, and recent research from Urban Institute highlights just how much a group premium will set someone back compared to coverage on the individual market. However, the existence of small business tax credits as well as options on the individual market provide small business with more coverage options than ever before. Brokers are needed more than ever before to help educate small businesses on the nuances of the law that directly affects them in their pursuit of the most affordable health insurance options available. This need for constant communication drives the broker’s value even higher.
As the uninsured get harder and harder to reach, the role of the broker only increases in importance. Those groups identified above that are adversely impacted pose a unique opportunity for enrollment outreach. By identifying their primary concerns, meeting them where they are, and amplifying communication strategies, brokers can effectively increase access to health care for the remaining uninsured.
This article was originally posted in BenefitsPro’s Broker Innovation Lab.
Health insurance is getting a bad rap: it’s complex, complicated, and if you ask nearly any health insurance shopper or user, it’s endlessly frustrating. On top of it all, health insurance has taken center stage in the media lately, making everyone all the more uncertain about the future of the health insurance offerings. That’s why we’re clearing the air to answer your frequently ask questions, like “How do I pick?” “What does it cost?” and “What is going on with Obamacare?”
Q: Do I still need, or can I still buy, insurance if Obamacare is partially repealed?
Let us elaborate: At this point in time, you must obtain health coverage for 2017. If you remain uncovered this upcoming year, you will face a hefty penalty 2.5% of your annual household income or $695 per adult (and $347.50 per child). What’s important now is to focus on getting insurance for 2017. Any changes that could happen would likely take a while to be enacted and any new legislation will likely include a buffer period to give enrollees time to find coverage elsewhere. It’s important to purchase insurance for 2017 before Open Enrollment ends on January 31st, and you still have the opportunity to potentially receive financial assistance from the government when doing so.
Q: Okay, so what should I purchase?
A: It depends.
We know that’s not the answer that you want to hear, but let us break it down for you. There is no superior or best plan, it’s about what your needs and your budget are. For example, if you pick a plan rich in health care benefits with a high monthly premium but are healthy, you are likely overpaying for health insurance. There are additional factors to consider that are very specific to your personal needs, including whether your doctor accepts the health plan or if the drugs you take are covered. Here are the top things you should consider when choosing a health plan.
Q: Well, to make sure I’m not overpaying, how much will a health plan cost me?
A: It depends.
We’re sorry to do that again to you, but it’s true! What you pay for health insurance can depend on where you live, your income, what you’re eligible for, who you are covering, and even your age or smoking status. If you are not eligible for health insurance programs like Medicaid or Medicare, take a look at these helpful hints to make sure you aren’t over paying. If your annual income is between 100% ($11,880) and 400% ($47,520) of the federal poverty line, you may be eligible for additional premium reductions in the form of an Advanced Premium Tax Credit (APTC).
Q: This still looks like a foreign language to me. How do I know what I’m buying?
A: Health literacy is perhaps the most widely cited reason for health insurance confusion and complexity.
There are two important parts to understand your insurance: (1) the definitions and terminology, and (2) knowing how to calculate the costs. You can find a helpful video here, which will help you answer questions like how much you are on the hook for if you have a $2,000 deductible, a $50 copay, or 20% coinsurance.
Q: I need help. Where can I get it?
A: The first step is acknowledging that you need help.
We’re kidding, but since you asked:
- You can get personalized assistance from a health insurance expert like a broker or navigator. Look for one here.
- Up your health literacy by referencing a health insurance glossary
- Find more helpful tips in Wellthie Founder and CEO Sally Poblete’s interview with BuzzFeed’s Casy Gueren.
As the health care industry was sitting anxiously awaiting the unknown 2017 health policy landscape, Washington was setting the stage for what’s to come. On December 7th, the 21st Century Cures Act passed with bipartisan support allocating $6 billion to spur innovation, research, and access for major national health issues such as opioid abuse, cancer, biomedical devices, and metal health. The substantial piece of legislation has little to do with the insurance industry and much more to do with drug and medical device innovation, so why is the health insurance industry up in arms? The answer is hidden in Section 18001 of the legislation. Let us explain:
Deep within the 21st Century Cures Act lies a huge achievement for small businesses who are looking for more affordable ways to support coverage for their employees. This huge achievement presents even greater opportunities. Section 18001 of the law allows employers with fewer than 50 full-time employees to fund Health Reimbursement Arrangements (HRAs) to pay for out-of-pocket medical costs and health insurance premiums for coverage purchased on the individual market. The reason this is revolutionary for small businesses is that they are now able to fund employees who purchase health insurance through the individual market, including for coverage purchased on the public exchanges. Under this rule, small businesses can be reimbursed for up to $4,950 annually for an individual and up to $10,000 annually for a family beginning January 1, 2017. For those that receive insurance through the public marketplace, premium tax credits will be reduced by the qualified HRA benefit available.
Not only does Section 18001 give small business more flexibility to choose between the group market or the individual market (both in a tax-advantaged way), it may also work to spur growth, perhaps even stability, on the individual market. In its current state, the majority of small businesses do not offer health insurance to their employees. This is not because employers don’t want to offer coverage; it is simply because the cost of small group coverage is all too often unattainable for these small groups. Combined with the fact that under the Affordable Care Act, these groups were not mandated to provide health insurance for their employees, low enrollment small group coverage has remained steady or declined in recent years.
While small group coverage remains low, the size of the small business sector continues to grow. Over 40 million Americans work in small businesses, and by conservative estimates, over 22 million do not receive employer-sponsored coverage. What Section 18001 provides is more options and flexibility for small businesses and the millions of Americans fit to benefit from it.
But with increased options, comes increased confusion: that’s where Wellthie can help. While health insurance carriers and insurance brokers are poised to gain with increased opportunities to support small businesses in finding affordable coverage under the new HRA laws established by the 21st Century Cures Act, Wellthie analyzes the small business decision in real time. Our integrated quoting and decision-support tool is the first and only technology to compare small group and individual offerings in one holistic platform providing a 21st century cure for the 21st century small business. Let us show you how.