Small Businesses and COVID Health Coverage Concerns

The pandemic has affected everyone in some way or another. Small businesses have reported in a recent poll, that health care costs for their employees have been particularly challenging to maintain. Many had to reduce coverage, benefits, and employer contributions as a result of the economic downturn from the pandemic. The Covid crisis is causing so much disruption in non-emergency care that insurers and employers can’t really estimate health spending. Employers are reporting premium rate increases of 3% to 4.5% for 2021 from major insurers, but they worry delayed care will result in more acute medical claims next year. It is important to know your options and learn what is available to you, your business, and your employees! 

As a business owner, you can sponsor health insurance plans for employees. Group health plan premiums have increased in cost significantly over the years and for some owners, this is not a sustainable financial solution. The cost is determined by the state the company operates in and some states have additional restrictions around underwriting and pre-existing conditions coverage. Some alternative options to consider are:

  • Health Reimbursement Arrangements (HRAs)
  1. HRAs can be used to reimburse premiums for individual health insurance chosen by the employee, promoting employee and employer flexibility. HRAs provide several advantages. Employers receive the tax benefits of HRAs. Just think, no plan renewal every year or increases. The employer determines how much to contribute, making it easy to manage and control costs. Employers have the flexibility to design HRA plans, offering employees choices and customized options for their health insurance versus a one size fits all approach. Programs can include major medical (ACA) plans, dental, vision, and other health-related supplemental coverage options. HRA’s help businesses attract and retain top talent. 
  •  Individualized health coverage options for employees
  1. Coverage (through the marketplace) Not linked to the job
  2. New subsidies are available, making this a potential option.
  • Self-insurance person or business does not take out any third-party insurance, but rather a business that is liable for some risk, such as health costs, chooses to bear the risk itself rather than take out insurance through an insurance company. Typically, a self-insured employer will set up a special trust fund to earmark money (corporate and employee contributions) to pay incurred claims.” Employers can be partially or fully self-insured. Employers that choose to partially self-fund, may decide, for example, to continue third-party coverage of mental health or prescription benefits, but self-fund all other medical claims. Self-insured group health plans are governed by a variety of state and federal laws including, but not limited to: ERISA, HIPAA, COBRA, the U.S. tax code, and federal anti-discrimination laws such as the ADA. 
  1. The primary disadvantage of self-insurance is the assumption of greater risk. A year that brings large unexpected medical claims requires that the company has the financial resources to meet its obligations. This unpredictability puts greater demands on budgeting and cash flow. Budgeting is more difficult because health care expenses will vary from year to year, whereas with a fully insured plan, employers know how much they will pay in premiums in a given year. Self-insured plans also require strong administrative skills. Self-insured employers can either administer claims in-house or subcontract the administrative obligations to a TPA. 

Coverage options can be challenging to understand, and LIG is your resource! If you are a sole proprietor/1099/independent contractor or have one or more W2 staff – LIG Solutions can help you review your health coverage options. Contact the team at LIG today! Check your organization’s membership section to learn how to access this exclusive member benefits program.

Call 877-804-9756 to be connected to a LIG licensed agent today or fill out the form below to request more information.

Disclaimer: LIG Solutions complies with applicable federal civil rights laws and does not discriminate on the basis of race, color, national origin, age, disability, or sex.


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