Changes in the way small and mid-sized companies are regulated by the Affordable Care Act have already made a substantial difference for many of the 60 million workers and their families insured through their employers.
As of Jan. 1, 2016, small business groups are defined as companies with one to 100 employees. The market that once consisted of independent grocers, auto repair garages, local restaurants, dry cleaners and beauty salons has grown to encompass larger small companies such as financial services firms, car dealerships and more. Meanwhile, employers are looking to provide a wider range of options and flexible plans to remain competitive. These changes, however, provide benefits professionals with an opportunity to onboard new clients and improve retention of existing clients simply by helping navigate the change.
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Not all changes are viewed as negative. Health care reform and government-sponsored exchanges have accelerated consumers’ appetite for identifying and choosing the best coverage. This works well for the many consumers and businesses now considering federal and state health insurance exchanges, as well as the private exchanges that have served the market for years. An exchange, or what I like to refer as a virtual mall for health insurance, allows consumers to consider many options before selecting the best fit. Not only can enrolling in the wrong plan prove costly if the choice is made randomly, but studies show small businesses and their employees may be confused, frustrated, unhappy and — perhaps most importantly — improperly covered for their needs.
A recent University of Pennsylvania Wharton School study demonstrates the “health literacy” of Americans is actually quite low. The report found only about 14% of respondents could correctly answer multiple-choice questions about the four basic components of health insurance plans: deductibles, copays, coinsurance and maximum out-of-pocket costs. Additionally, just 11% could navigate the features of a traditional plan to calculate the estimated cost of a four-day stay in the hospital.
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For a company of any size, choosing insurance for its employees can be complex. It tends to be even more so for businesses with limited resources, which must be aware of all the different tax laws related to employer coverage and then factor in the needs of all workers and dependents. This is where the broker can help shepherd small businesses and their workforce through the identification, selection and management of health benefits.
The bottom line is that the expansion of the small group market has created more options, flexibility and opportunity than ever — just in time for this year’s open enrollment period. Today’s marketplace trumpets the virtues of variety, but the reality is that choice works best when it is smartly optimized; this is where brokers and other benefits professionals have the opportunity to step in and direct employers and their workforce to the options to aid their health over the course of the next 12 months.
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