Health Benefits Help SMBs Hire and Retain Workers Despite Ongoing Challenges

 | Source: BenefitsPRO, by Alan Goforth


Although small and mid-sized businesses may lack the resources of their larger counterparts, they face many of the same issues in recruiting and retaining qualified employees.

“It’s a challenging time for smaller employers,” according to a report from eHealth. “Most said it’s harder to find good workers today than it was three years ago. While some simply can’t afford it, offering group health insurance helps many to hire and retain quality employees. Unfortunately, health benefit costs are increasing, and many employers may soon reach a breaking point. A relatively modest increase in costs could make it impossible for them to continue offering health coverage to workers.”

Still more challenges may be on the horizon.

“New federal rules coming into effect this March could recategorize many contract and gig workers as employees, potentially making them also eligible for health benefits,” the report said. “For those who can’t afford group coverage, alternatives like individual health coverage reimbursement arrangements (ICHRAs) are available, but many small businesses don’t know about them.”

eHealth recently surveyed more than 550 owners and managers of small and mid-sized businesses about the key issues they are facing.

  • It’s a challenging labor market for smaller employers. Eight in 10 respondents said it’s harder to hire and keep good workers today than it was three years ago.
  • Offering group health coverage is important to small businesses. More than 9 in 10 said it’s important, with 69% calling it “extremely important.”
  • Health benefits help them hire good workers. Ninety percent of those offering health coverage said it helps them hire and retain the best workers.
  • Rising health benefits costs are a big concern. Among those offering coverage, 44% are “very worried,” while 37% are “somewhat worried.”
  • Modest premium increases could make coverage unaffordable. Forty-seven percent said an increase of 15% would make offering coverage unaffordable.
  • Many companies not offering coverage can’t afford it. More than 8 in 10 of those offering health coverage pay $200 or more per employee per month, but only 14% of those not offering health coverage can afford to pay that much.
  • New labor rules categorizing contract workers as employees could have a big impact. Forty-eight percent of respondents currently employ contractors or gig workers. If they are categorized as employees, businesses with 50 or more total employees may be required to offer them group health coverage or an acceptable alternative.
  • About half of respondents are unaware of group coverage alternatives. Fifty-five percent are uneducated about ICHRAs, which allow employers to provide a monthly stipend for employees to buy coverage on their own.


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