Health Insurance Emerges as a Key Magnet for Business Talent

Analysis

Not long ago, employee health insurance at almost any level seemed assured.

Currently, as an increasing number of U.S. small businesses struggle with exorbitant insurance premiums, the situation for employee health insurance is becoming critical: whether to reform the Affordable Care Act (ACA), develop a new private health care system, or pursue a form of universal health care—essential for attracting top talent and preventing workers from constantly pursuing better offers.

“In South Carolina, merely 20.5 percent of businesses with fewer than 50 employees provide employer-sponsored health insurance—and this issue is only going to exacerbate,” expressed Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce in Columbia, South Carolina, in an interview with The Epoch Times.

“Large enterprises [with over 50 employees] are required under the ACA to offer a qualified group health plan. Yet, the trend is for more small businesses with fewer than 50 employees to refrain from offering group health care.”

He further noted that while larger corporations contend with rising health insurance costs by cutting back on benefits and increasing deductibles, they still enjoy greater flexibility and more options.

Related Stories

“Larger companies can elevate prices for their services or products, or even reduce their workforce—this is how they manage rising health insurance expenses,” Knapp noted. “Small businesses typically forfeit these benefits altogether.”

All these factors, according to Knapp, make it challenging for small businesses to “compete for talent while larger competitors provide group health benefits.”

What happens to job seekers when the health care incentives of large companies are exhausted, and smaller firms provide limited or no health care options?

One increasingly popular solution for both employers and employees is the ICHRA—Individual Coverage Healthcare Reimbursement Arrangement.

Available through the Health Insurance Marketplace, ICHRAs enable employers to allocate tax-advantaged funds toward health benefits that employees select on the individual market.

Ben Green, president and COO of Insurance Advantage in Columbia, South Carolina, illustrated this using the example of a 50-year-old single woman earning $40,000 annually, whose employer contributes $200 per month toward a health insurance plan.

This setup allows her to qualify for an estimated premium tax credit of $516 monthly.

Consequently, depending on the available marketplace plans, her monthly premium could be as low as $0.

However, a notable caveat is that many low-premium ICHRA plans come with increased deductibles and significant out-of-pocket maximums.

For instance, the $0 monthly premium in the previous example includes an individual deductible of $7,500, meaning she would need to cover all primary care, specialist visits, urgent care, emergency services, and outpatient mental health costs until this deductible is met. Furthermore, the out-of-pocket maximum is $9,200—arguably less than a hospital visit without coverage, but still a substantial amount for unexpected expenses.

Beyond ICHRAs, some legislators are contemplating a single-payer system.

Sen. Ed Markey (D-Mass.) put forth similar legislation in July that would enable states to obtain a “super waiver” from the Department of Health and Human Services to provide comprehensive, universal health coverage for all residents.

Regardless of whether this endeavor ultimately succeeds or falters, one thing appears certain: resolving health care challenges among U.S. businesses, particularly for small enterprises, is essential to achieving better profits, reducing turnover, and possibly restoring what was once referred to as employee loyalty.

“It is well-established that a healthy employee is a more productive employee,” Knapp stated. “That’s why we encourage small businesses that do not currently offer group health insurance to assist their workers in finding coverage through the federal health insurance marketplace.”