Small Business Big World Episode 25: Rising Health Insurance Costs for Small Businesses
This is Small Business Big World, our weekly podcast prepared by the team at Paper Trails. Owning and running a small business is hard. Each week we’ll dive into the challenges, headaches, trends, fun and excitement of running a small business. After all, small businesses are the heartbeat of America and our team is here to keep them beating.
Watch the full episode here.
Listen to the full episode here.
Small businesses across Maine are feeling the pressure as health insurance premiums continue to rise. This isn’t just a minor inconvenience; it’s a significant challenge that affects both the bottom line and the well-being of employees. In one of our latest podcast episodes, we dive deep into the factors driving these increases and explore practical strategies to help small businesses manage the costs effectively. We were joined by Conner Kennedy of Acadia Benefits to talk through this topic.
Here, we’ll provide an overview of the episode, touching on the complexities of the community-rated small group market, the implications of legislative changes, and actionable tips for managing rising costs. If you’re a small business owner grappling with these issues, this episode is a must-listen.
Understanding the Community-Rated Small Group Market
For small businesses in Maine, the community-rated small group market plays a crucial role in determining health insurance premiums. If your business has fewer than 50 benefit-eligible employees, your premiums are set based on the age and location of your employees rather than their health status or claims history. This approach, while equitable in some ways, presents unique challenges, especially in Maine—a state with one of the oldest populations in the U.S. and located in a region with high healthcare costs.
The podcast explores how the merging of individual and small group markets was intended to simplify insurance offerings and standardize rates. However, the repeal of the individual mandate has added layers of complexity, making it more difficult for small businesses to navigate these changes without expert guidance.
Major Cost Drivers for 2024
A significant part of the podcast is dedicated to explaining the major cost drivers behind the projected 15% increase in health insurance premiums for 2024. The episode highlights several contributing factors:
- Legislative Changes: New laws, like Megara’s adjustment in carrier reimbursement, which reduced coverage for high-cost claims from 100% to 75%, are driving up costs.
- Inflation and Medical Advancements: General inflation and the rising costs associated with new medical technologies are also pushing premiums higher.
- Drug Prices and Expanded Coverage: The soaring cost of prescription drugs and new mandates requiring insurers to cover additional services, such as fertility treatments, are adding to the financial burden for employers.
Practical Strategies to Manage Rising Costs
The podcast doesn’t just focus on the challenges; it also offers practical strategies for small business owners to manage these rising costs. Some of the key strategies discussed include:
- Plan Design Adjustments: Consider offering plans with higher deductibles to reduce premium costs. While this shifts more of the financial responsibility to employees, it can be a cost-saving measure for businesses.
- Contribution Strategies: Offering dual options where the employer covers a larger portion of a lower-cost plan can be an effective way to manage expenses.
- Health Savings Accounts (HSAs): HSAs are highlighted as a powerful tool to help employees manage high deductible plans. The tax advantages and the ability to save for future healthcare expenses make HSAs an attractive option for both employers and employees.
Importance of Employee Education
One of the episode’s key takeaways is the importance of employee education. The hosts emphasize that educating employees about their health plan options, especially when it comes to HDHPs paired with HSAs, is crucial. Employees need to understand the long-term benefits of lower premiums and tax savings, even if it means higher out-of-pocket costs upfront.
The podcast suggests providing ongoing education through benefit education recordings and other resources to help employees make informed healthcare decisions. This proactive approach ensures that employees are aware of any changes in their plans and can better manage their healthcare expenses.
Conclusion
Rising health insurance costs are a significant challenge for small businesses, but by understanding the factors driving these increases and exploring practical solutions, business owners can take steps to mitigate the impact. The episode offers valuable insights into managing these costs and underscores the importance of employee education in navigating health insurance decisions.
To get the full picture and dive deeper into these strategies, be sure to listen to the full episode of ‘Small Business Big World’. Whether you’re already facing rising premiums or just looking to stay ahead of the curve, this episode is packed with information that can help you make the best choices for your business and your employees.
This podcast is a production of Paper Trails. We are a payroll and HR company based in Kennebunk, Maine, and we serve small and mid-sized businesses across New England and the country. If you found this podcast helpful, don’t forget to follow us at at Paper Trails Payroll across all social media platforms and check us out at papertrails.com for more information. As a reminder, the views, opinions and thoughts expressed by the hosts and guests alone. The material presented in this podcast is for general information purposes only and should not be considered legal or financial advice. By inviting this guest to our podcast, Paper Trails does not imply endorsement of or opposition to any specific individual, organization, product or service.