Many factors impact your company’s ability to attract and retain the talent you need to succeed including your company’s reputation, the ability to offer competitive pay, employee benefits offering, organizational culture, diversity, equity and inclusion initiatives, as well as a host of other offerings and characteristics.
While professional employer organizations (PEOs) typically provide a spectrum of HR-related services including payroll administration, risk mitigation, HR expertise, workers’ compensation and a technology platform, access to comprehensive employee benefit plans are key for ongoing recruitment and overall employee satisfaction.
The problem is that for over a decade, health care premiums in the U.S. have continually outpaced the overall economic growth1 . This has created problems for businesses and individuals, especially with the current uncertainty of the COVID-19 pandemic. National health spending is projected to reach $6.2 trillion by 20282 and small-business owners are increasingly concerned about the ability to provide adequate health coverage to their employees. However, employer-based health insurance likely is a necessity when it comes to attracting and retaining top talent in various industries and business owners shouldn’t feel limited in their choices.
While, many small businesses have found that, in the past, many employee benefits plans are not available for small businesses and are reserved for large companies, a PEO leverages the collective strength of thousands of small and medium-size businesses to deliver access to premium-level, large group benefit plans. While this gives business owners access to benefits for their employees, it’s important to understand some crucial information about prospective health insurance plans and their benefits.
How a PEO Can Help Small to Medium-Size Businesses
Health insurance costs are rising and many small to medium-size businesses (SMBs) carry the burden of increased premiums. This is often due to disproportionate cost sharing between employers and employees, which is referred to as a “leveraged trend.” Leveraged trends occur when rising premiums are counterbalanced by increased co-pays and deductibles, thus leaving SMBs vulnerable. However, supplying comprehensive benefits packages are essential to business growth and development. This is where a PEO can be valuable.
PEOs provide access to large company benefits that otherwise may not be available to SMBs. They also provide insight, clarification and communication surrounding complexities that arise during employees’ health insurance selection and included benefits, co-pays and deductibles. SMBs may see results that improve savings while contributing to a healthier, happier and more productive workforce.
Seven Important Health Insurance Questions to Consider
While working with a PEO will provide SMBs access to big-company advantages, it’s still important to offer a strong employee benefits plan. In order to mitigate rising costs, SMBs need to make an informed decision about their health benefit funding strategies. To overcome the competition for talent, business owners should consider providing high quality health insurance with individual choices and reasonable cost sharing. To help you make the right decision, here are seven important questions to consider before choosing the health insurance your company will offer.
1. Am I required to provide health insurance for my employees or potentially pay an ACA penalty?Under the Affordable Care Act (ACA), SMBs that have a monthly average of more than 50 full-time equivalent employees during the prior calendar year are applicable large employers (ALEs) and required to offer health insurance to full-time employees that’s affordable, or potentially pay a penalty. ACA requirements vary based on business size, number of full-time employees and hours worked by part-time employees. However, the ACA should not be the only reason you pursue an attractive benefits plan. Comprehensive benefits help improve talent requisition, employee satisfaction and employee retention.
2. Will all employees receive coverage?SMBs who are ALEs will need to ensure that at least 95% of their full-time employees are offered coverage under their health insurance plan or potentially pay a penalty. Coverage for part-time employees is not required by the ACA and varies along with services such as prescription drug coverage, dental and vision insurance.
3. Is health insurance related to employee satisfaction?Yes, health insurance is directly related to overall employee satisfaction within a business3. Due to rising costs for individual coverage, many job seekers look for companies with attractive benefits packages. While medical coverage used to be the primary incentive for individuals, that has shifted in recent years. Now, non-traditional benefits are also taken into account when evaluating employee satisfaction. A 2018 study conducted by TriNet4 found that 91% of respondents at SMBs viewed non-traditional benefits as an important aspect of their job satisfaction.
4. How much will your company contribute?Cost is understandably an important deciding factor in choosing your company’s health insurance, especially as prices continue to rise. Since the costs can be shared in different ways between the employer and employees, you need to understand how your plan costs will be divided. If you pay your funding strategy on a low-deductible, high-premium plan, you will be paying more per employee and they would benefit from lower out-of-pocket costs.\The structure, demographic and size of your SMB may also influence how much your company will contribute to benefits, so you’ll want to choose a strategy that appropriately reflects your business. For example, if the average age of your employee is older, they’ll likely want as much coverage as possible. Younger employees may be satisfied with less coverage and higher deductibles. All of these factors will influence the out-of-pocket costs incurred by business owners.
5. What are the different types of health insurance plans available?There are several different options when choosing a health insurance plan for your SMB. In a fully insured health insurance plan, the insurance carrier assumes all risks. Business owners will pay a fixed premium to the insurance carrier to manage and handle these plans, regardless of the amount or extent of claims that are made. This allows for predictability of cost within any given year but can change dramatically from one policy year to another. In a self-insured plan, the company assumes risks and pays claims. While this creates more work for business owner, it may be more cost effective than fully insured plans and allows for customization.
6. What does the plan cover?Understanding the plan’s coverage is one of the most essential parts of choosing your company’s health insurance. Top talent wants access to comprehensive benefits plans that include basic medical coverage as well as dental, vision, life and disability insurance, retirement programs and transit coverage. Many employees are also seeking non-traditional benefits such as flexible work arrangements, paid leave, childcare, pet insurance and ongoing training.5When discussing the details for prospective health insurance, inquire about geographic coverage and whether plans cover special procedures and family members. Finding a comprehensive plan will help you save money, improve employee satisfaction and hire the talent you need to grow your business.
7. What does the network of doctors look like?Before selecting your company’s health insurance plan, examine the network of doctors that will be available to your workforce. Health maintenance organizations (HMOs) only allow employees to visit doctors from an approved list and may complicate the process of seeing specialists or other practitioners. While these plans can be less expensive, they’re not always the best option for your employees. A preferred provider organization (PPO) allows your employees to choose their own doctor, which can be an important factor in overall job satisfaction and ongoing medical care.
Many SMBs lack the experience, expertise or resources to shop for and ask questions regarding cost-effective benefits packages. Don’t let high premiums and inadequate coverage restrain innovation and growth within your small to medium-size business. By working with TriNet, you’ll have access to national and regional health insurance carriers so you can attract top talent in a job market where employees and their families place value on the quality of coverage. TriNet provides the resources that small to medium-size business owners need to offer a compelling benefits plan that shows your employees how much you care. You’ll gain access to premium health insurance benefits that extend beyond medical, to dental, vision, life, disability, retirement, transit and a wide range of non-traditional benefits.
1 "Why health-care costs are rising in the U.S. more than anywhere else," CNBC (2022)
2 "How has U.S. spending on healthcare changed over time?” Health System Tracker (2022)
3 "Employees Are More Likely to Stay If They Like Their Health Plan” SHRM (2018)
4 Survey conducted by TriNet between May 14 and 21, 2018 with approximately 3,000 respondents who were all employees of TriNet clients.
5 "The Benefits of Benefits to SMBs,” TriNet (2020)
