Small Business Owners Are Reportedly Looking For A Simpler And Less Expensive Healthcare Carrot To Lure And Retain Employees

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Healthcare costs continue to rise in the U.S., outpacing inflation, directly affecting workers and the small businesses that employ them.

The number of small businesses with less than 199 employees has dropped 11% in the past 10 years to 60%, according to the 2021 Kaiser Family Foundation Employee Health Benefits Survey. But with small businesses scrambling to attract workers in the COVID era, healthcare is a valuable carrot.  

The restaurant industry has reported being especially hard hit in its effort to retain workers. Melissa Swift, a leader of the transformation practice for Mercer Asset Wealth Management, told Forbes that lower-wage workers, Black Americans, Asian-Americans, and the restaurant industry as a whole, say their “No. 1 issue is still pay and benefits.”  

Even former U.S. Secretary of Labor Robert Reich said recently that it would be hard to invent a more expensive and less effective healthcare system than that of the United States where the typical American family spends more than $6,000 a year on traditional premiums and out-of-pocket expenses of $6,800. As those traditional healthcare costs continue to rise, self-funded health plans are becoming more attractive — not only to employees but also to small businesses.

Self-funded plans, sponsored by the employer instead of the insurance carrier, take on all the risk and pay employee claims as they come in. While a bit overwhelming for small businesses on the front end, there can end up being some significant cost advantages to a self-funded plan, including eliminating the carrier and avoiding makeup fees as well as additional tax advantages. The company is also only paying for the healthcare that employees use. 

Traditional carriers such as UnitedHealth Group Inc. UNH, Cigna Corp. CI, and Anthem Inc. ANTM are examples of companies focusing on fixed premiums that must be paid whether claims are made or not.  

A Society for Human Resource Management survey of private-sector employers found that 40% use self-insured options for their employees. Companies like Sana Benefits and its level-funded option, a form of self-funding, are looking to help upend the dynamic of how easy it is for small businesses to offer employee health-coverage packages with full medical, dental, and vision without the usual care-management headaches or hidden fees. A level-funded health insurance plan offers the financial predictability of a full-funded plan yet meets the cost savings of a self-funded plan. 

By allowing employers to administer a health plan with low copays, free virtual visits, and no restrictions on choosing doctors, Sana states that it offers small businesses packages that will help them recruit and retain employees. 

Sana also says it focuses on making the healthcare process easier for employers than traditional plans by offering easy onboarding and open enrollment with free access to perks including ClassPass fitness, Vida weight loss programs, and Maven maternity options. 

Sana touts its health option differentiation as the way it handles customer service, advanced technology in managing plans, and transparency for both employers and employees. 

For more information on healthcare plans offered to small businesses through Sana, visit here.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.

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