Group Health Insurance vs. Obamacare – What Makes Sense  for Small Business Owners

Affordable Care Act

Group Health Insurance vs. Obamacare – What Makes Sense for Small Business Owners

Published on October 24, 2016

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Updated August 8, 2019
Why do so many small businesses continue to offer group health coverage to workers and their dependents when they are not required to do so?
The answers may surprise you. When eHealth surveyed a group of its customers that were small business owners offering health insurance to employees, eHealth found that most small businesses offered health insurance to employees either through a sense of moral obligation (43 percent) or in order to help them hire and retain good workers (66 percent).

Source: eHealth 2018 Small Business Health Insurance Report

Employer concerns about the cost of individual coverage in the open market

None of this means that employers don’t sometimes worry about affording health coverage for their employees in the future. More than 8 in 10 small businesses are concerned about their continued ability to offer health benefits, according to eHealth’s survey.

Source: eHealth 2018 Small Business Health Insurance Report
The eHealth survey also found that increases in premiums could cause many small businesses to drop coverage, with 63 percent of employers saying that an increase of 15 percent or less will make their current plan unaffordable.
About a quarter of employers (26 percent) said that the reason they provided health insurance for their workforce was concern that employees could not afford to purchase coverage on their own.
The dollars seem to bear out this concern. In an analysis of small business health insurance plans purchased through eHealth, the average cost of coverage per person was $409 per month in 2018. By comparison, individuals who purchased 2018 health insurance plans for themselves through eHealth without a government subsidy paid an average monthly premium of $440.

Source: eHealth 2018 Small Business Health Insurance Report
In other words, group health insurance may be the more affordable way to get coverage for many folks.

Benefits administration and small business health insurance

Health Insurance for small employers
Offering group health insurance benefits can still be a burden, of course. Group insurance plans may help you retain good workers and may have lower premiums than individual insurance policies, but administering a benefits program can be time consuming and involve a lot of paperwork.
In eHealth’s 2016 survey of small business owners, a large majority of them (87 percent) said they manage employee benefits on their own, spending an average of 1.6 hours per week on benefits administration. During open enrollment, employers say they spend about 8 hours managing the enrollment process. More than a third (37%) said that administering employee benefits involved moderate to heavy paperwork.
Perhaps tellingly, few of the survey’s participants reported using any form of benefits administration software to help them manage the process.

Benefits support small business owners can count on

Whether they’re shopping for group health insurance coverage, or looking for more affordable coverage alternatives, small business customers can use the kind of help and support offered by licensed health insurance brokers like eHealth.
This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.

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