Advisers must cultivate unique benefit strategies for SMBs
The healthcare insurance market today’s small businesses face can be a challenge, due in large part to consistent cost increases coupled with complex insurance regulations that seem to be in constant flux. As advisers, it’s our job to help clients navigate these challenging times and guide them through the establishment of a benefits strategy that not only meets their benefit goals, but also meets their budget.
This is a significant opportunity for advisers who are willing to devote the time and energy needed to ensure their small business clients are well-served and positioned for success when it comes to their benefits strategy.
While the uncertainty with regard to healthcare continues, the current regulations set forth under the Affordable Care Act still apply to small business owners and all Americans. With the healthcare debate ongoing, many small business owners remain unsure of how they should proceed or what alternative options may exist.
Business owners across the board — regardless of size — are focused on running and growing their business. With that, managing a benefits strategy tends to slip down on what is inevitably an unending list of priorities. This is where benefit brokers can add a lot of value: doing the grunt work on behalf of our clients, sharing expertise and delivering strategies that are adapted to the current legislative landscape.
Regardless of regulatory uncertainty, the No. 1 issue facing small business owners remains managing the rising costs of group health insurance, while still attracting and retaining employees in an increasingly competitive labor market.
Small firms, many of which already have very stretched budgets, regularly see double-digit increases year after year, resulting a significant cost burden. This will often lead small businesses to question their ability to continue to offer health insurance. As such, advisers need to bring forth proactive strategies that will help their small business clients effectively manage costs.
Beyond traditional options
Among many small business owners there’s a general lack of awareness about alternative healthcare options that may fit their needs and those of their employees better than traditional health insurance plans. For example, small businesses are generally not familiar with how effective consumer driven healthcare plans can be when it comes to reducing costs — not just at renewal, but in the long term, as well.
CDHPs can be a great option for firms struggling to afford providing coverage to their employees. However, it usually means more than just shifting costs from the employer to the employees by raising deductibles and offering an HSA or HRA. Setting the deductibles, deciding how much to contribute to an HSA or HRA, and developing a transition strategy are critical steps in finding the balance between cost cutting and offering benefits that encourage employee retention.
Other options that may or may not offer a good fit for certain small businesses include “alternative funding arrangements” and qualified small employer HRAs. As an adviser, it is important that you continue to review options like these with your clients.
How do you go about recommending non-traditional plan types to small business clients who would rather not put any additional time into thinking about insurance? Bring a long-term perspective and focus on proactive education. By introducing the concepts to the client well in advance of the annual renewal, you give clients the necessary time to understand the impacts on their budget and employees.
Continuously educating your small business clients on the different insurance options available to them can help them feel more comfortable choosing the options that will best serve their employees and their business, helping solidify you as their trusted ally in the complex and changing regulatory environment.