How Payers Can Improve the Value of Small Business Health Plans

November 28, 2017 - Payers offering insurance plans for the employer market need to provide flexible benefits and cost-saving strategies that create value for small businesses.

Small businesses are an excellent market opportunity for payers because health plans provide these businesses a recruiting tool for new employees, incentives to retain current employees, and ease the healthcare-related stressors of operating a business.

However, small businesses may not be encouraged to provide healthcare coverage for employees if they view a potential health plan as too costly, inefficient, or incompatible with the needs of a business’s employees.

Some of the smallest businesses, with under 50 employees, are not required by law to provide health insurance coverage, which adds another challenge for payers looking to enter the small business market.

How can payers improve the value of their health plan offerings to small businesses?

Customize benefits that are flexible for small business needs

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Because some small businesses are not required to provide insurance under the ACA, payers may be able to encourage voluntary adoption by allowing small businesses to pick and choose benefits in a customizable manner.

Payers should help small business answer preliminary questions about the benefits they absolutely need with buying guides.

Buying guides include questions that help target offerings to the employee pool, such as if employees need single or family coverage, if employees prefer high deductible plans with lower premiums, or if employees want supplemental insurance such as dental and vision along with medical benefits.

For example, Aetna offers employers a variety of benefits, network provider options, and multiple funding options that can appeal to different types of small businesses.

UnitedHealthCare takes a similar approach by offering plans that can be tailored for small businesses, as well as coverage options for either relatively healthy individuals or people with expected chronic diseases.  

Provide coverage for preventive services that boost cost-savings

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Chronic diseases contribute to billions in healthcare spending, and small businesses may not have the financial resources to provide coverage options suitable for the high needs of people with chronic diseases.

Roughly 82 percent of small businesses experience cash flow problems, which is one of the largest contributors to small business failure. There is already a financial strain for these businesses, so payers must appeal to them with healthcare services that save on costs.

Offering small businesses wellness benefits allows them to improve the health of their employees while reducing the need for costly healthcare utilization. Gym memberships and free chronic disease screenings can provide additional health plan value.

Employers can also help employees avoid unnecessary utilization by providing small financial incentives for getting healthy, opening onsite clinics that improve employee health, and expand biometric screenings that detect early indicators of chronic diseases in employees.

Payers should also appeal to cost-saving strategies that employers are already implementing. These include providing employers innovative delivery systems like telemedicine and providing appealing health carrier services like provider discounts and network access.

Protect small businesses from high health plan costs and premiums

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Catastrophic healthcare cost protection helps small business employees avoid significant spending that could potentially compound with already high premium contributions.

The Kaiser Family Foundation’s employer sponsored health survey found that small businesses spend an average of $5,486 in annual premiums for single beneficiary coverage and $10,801 for annual family coverage premiums.

Additionally, the smallest businesses that consist of a single entrepreneur or employee, can pay upward of $500 a month on premiums. These one-person businesses tend to experience the highest financial burden from premium payments.

Payers also have to protect small businesses employees from catastrophic health care spending by educating employers about at-risk individuals, and how their employees can be smart shoppers.

Identifying likely high-cost healthcare spenders, and enrollees at risk for high healthcare spending, may provide employers more insight into appropriate plan options. Payers must also educate small businesses about how employees with high-deductible health plans can effectively plan for necessary healthcare spending.

BCBS does this by offering value-based benefits that provide $0 cost sharing on preventive care, and by lowering the cost of medications for certain chronic disease medications.

Support enrollment processes for small business employees

Educating employees about their health benefits increases enrollment.  Making insurance simple to purchase also boosts enrollment for small businesses.

About 44 percent of employees do not comprehend their health benefits, according to the Lincoln Financial Group. The group’s research indicates that 87 percent of employees are more likely to purchase employer sponsored insurance when they have developed adequate knowledge of their benefits.

Payers can facilitate enrollment engagement strategies such as optimized retail experiences and connected point-of-sale services that help make it easier for individuals to gain coverage.

Research from McKinsey&Company also found that boosting consumer awareness through engagement strategies is key for improving enrollment.

“To effectively guide consumers, payers and providers should be prepared to heighten consumer awareness by giving them the right information at the right time at each stop along the consumer-decision journey,” the analysts said.

Additionally, payers should assist small businesses by providing health plans with multiple communication channels, and leveraging analytics to assist employers and plan administrators with making data-driven healthcare decisions.

Collecting and leveraging data from communications allows a payer to help small businesses identify when utilization will boost employee productivity, like making sure people are getting flu shots during a cold season.

Small business health plan options can improve the productivity and health of employees, and provide cost-effective value to the business as a whole. Payers mindful of various small business needs will be primed for success in the small business health plan market.