For small business owners and their employees, healthcare costs - which are constantly on the rise - are always a concern. According to Kaiser Family Foundation, premiums for family plans have increased by 55% over the past decade, which is twice as fast as worker pay has increased. In 2017 the average premium for small group health plans was $397 per month, compared to $440 for individual plans, according to eHealth. The main difference was not in the cost of premiums, but the deductible. That same year, the average deductible was $2,754 for group plans compared to $4,578 for individual plans. These costs can be hard on small business owners, and in another survey from eHealth, six out of 10 stated that increases of just 15% would make their current plans unaffordable.Yet as the workforce becomes stronger, job candidates have more leverage to ask for quality employee benefits. In fact, according to the eHealth study, more than six in 10 small business owners reported that they offer health insurance coverage to help them hire and retain the best workers. recruiting and keeping their workers. As a solution, more employers are turning to low-deductible health plans to draw talent, despite rising costs. Here is a closer look at the demand for low-deductible plans and how this demand is impacting small business owners.
Employers Are Moving Away from High-Deductible Health Plans
Even though they are more affordable for employers, high-deductible health plans (HDHPs) are losing popularity with employees. One reason is because with HDHPs, employees bear the greater cost. Employers are taking notice, as a recent survey found that only 39% of large, corporate employers were offering high-deductible plans as their only coverage option in 2018, and that number is expected to drop to 30% in 2019. Small business owners who are competing for the same talent as large corporations have to make a similar switch if they are going to attract the best candidates.
The Pros and Cons of Low-Deductible Plans
Low-deductible health plans (LDHPs) provide an appealing alternative to the high-deductible plans that are losing traction. LDHPs are more predictable for employees, because they’re not subject to large out-of-pocket expenses if they get sick or require medical care. This is a better choice for those with existing health issues or for older employees.
The drawback, on the other hand, is that the monthly premiums for low-deductible plans are higher than other options. Employees must pay their premium even if they never need to use health care services.
More Employees Prefer Low-Deductible Plans
As healthcare costs rise, low-deductible plans - in spite of their higher premium cost - are preferred by employees. This is especially true for those who have a known medical condition or anticipates having a medical need in the future. Due to the increasing demand for these plans, employers who offer them as an option have an opportunity to attract and retain the best employees.
The Right Help Reduces the Cost of Low-Deductible Health Plans
Despite the growing popularity of LDHPs among employees, these plans undoubtedly cost more for employers to offer. To offset the higher premiums, employers can provide cost-sharing and shoulder some of the burden. For small business owners that are looking for the best health plans at a competitive rate, the best option is to partner with a PEO that can leverage their large pool of clients to provide better healthcare rates.
Low-deductible health plans can be the key to recruiting top talent and giving current employees a peace of mind when they face a serious health need. These plans provide coverage with lower out-of-pocket expenses in the event of a serious medical issue or emergency. If you are considering offering a low-deductible health plan, contact a trusted PEO to get help finding the right coverage at the right price.