Patrick Rees, Marketing Operations Superstar
It’s Open Enrollment right now and employers, big and small, are considering their options when it comes to the healthcare benefits they offer their employees. Not all of us can afford to provide our employees the luxurious healthcare packages that multinational conglomerates offer, so it means we have to barter for the best deal and maybe accept an offer that doesn’t benefit all parties. Small employers, in particular, are at a disadvantage and cannot match the big boy's benefits.
However, the playing field has leveled out recently as a result of President Trump’s executive order expanding upon previous healthcare legislation. As of October 22nd 2018, small employers can now offer tax-free reimbursements for health insurance costs to their employees through Health Reimbursement Arrangements (HRA’s). This proposed regulation results in increased health coverage to millions of Americans.
So how does this new executive order, coupled with Open Enrollment, represent a unique opportunity for progressive small-business owners?
Well, HRA’s have historically allowed medical expenses and insurance premiums as eligible expenses, but the Affordable Care Act removed the ability to reimburse premiums through HRA’s. Now, following the executive order, premiums are back on the table. The proposed regulation intends to increase awareness and understanding of the arrangement. It is hoped that this will make it easier for firms to offer healthcare to employees as well as allow them to compete with larger firms. This means small employers don’t have to offer health insurance to all of the employees. Instead, employees can purchase the health plan that suits them and their employer can reimburse them using an HRA, tax-free.
With Open Enrollment underway and employers contemplating health insurance plans for the upcoming year, HRA’s could offer a more cost-effective and appealing healthcare offering than traditional plans. The cost of healthcare for Americans has been well-documented and, since 2010, insurance premiums have risen consistently. This makes it much more difficult for businesses to offer health insurance, particularly small employers. During that same period, firms with 25 - 49 employees have seen the percentage of workers covered by employer healthcare in America fall from 59% to 44%. The numbers worsen for firms with less than 25 employees as the percentage of workers covered has dropped from 44% to 30%. Suddenly, the prospect of implementing an HRA where the employer can decide exactly how much money they can afford to provide employees for healthcare is very appealing.
Most employers are currently in the process of negotiating a health plan for 2019 for their employees – a dreaded task for the poor soul put in charge of navigating that minefield. "What coverage can I obtain for all my employees? What coverage will please the majority? How much is the premium increase? Can we afford to cover the entire organization?" These and a host of other questions always hang over the person responsible for negotiating a health plan and, invariably, even when a plan has been agreed upon, not everyone will be happy with it.
An HRA gives the power to the employee. No two individuals are the same so why should they have the exact same policy? Let the individual choose the plan that suits their needs. I’m 26 years old, less than 150 lbs, and cycle to work regularly. Why should I have the same health plan as someone my age who smokes daily, drinks alcohol excessively, and eats a McDonald’s breakfast every morning? Common sense dictates that we shouldn’t, and, with HRA’s available, we should no longer have to offer one-size-fits-all policies.
There is a window of opportunity for small employers to make the most of the new legislation. Open Enrollment closes in a month but HRA’s are straightforward to implement. An example would be QSEHRA, which stands for Qualified Small Employer Health Reimbursement Arrangement and was recently introduced in 2016. Not only does the employer decide on how much money to offer employees for healthcare but they can customize offerings for individuals, couples, and families. On top of this, the money provided by the employer is tax-free and they can offer up to $5,040 per year for single employees.
It was predicted that the legislative changes would result in over one million employees being newly insured. The opportunity is there for small employers to offer something of immense value to their employees. Healthcare is something some people have limited or no access to. To not only change that but to offer the exact healthcare someone needs is special and something small-employers now have the chance to do.