Small Businesses Need Action to Expand Health Benefits Options

Small businesses are limited on offering employees health benefits, but they can take action to change that, says Vanessa M. Isaacson with Zane Benefits.

A recent report from Benefitfocus encourages mid-size employers to expand health benefit options for employees.

Another provider says small businesses would like to do that as well, but are unable.

Vanessa M. Isaacson, marketing specialist, Customer Advocacy, at Zane Benefits in Salt Lake City, Utah, says businesses with less than 50 employees are getting priced out of health benefit plans. “They want to help employees and also attract quality employees. Even if they can afford benefit plans today, premiums rise each year, and they get pushed out of the market,” she tells PLANSPONSOR.

Isaacson explains that previously, small businesses were allowed to use health reimbursement accounts (HRAs) to help employees pay for premiums and other out-of-pocket expenses, but guidance by the Treasury Department under the Patient Protection and Affordable Care Act (ACA) now says small businesses can only do this if they have one enrolled employee. “Those with two to 49 employees can no longer do this, and if they do, they are subject to an Internal Revenue Service (IRS) fine of $100/day or $36,000 per year for trying to offer these benefits,” she notes.

According to Isaacson, the Small Business Healthcare Relief Act will again allow reimbursement of health insurance premiums and out-of-pocket costs. “It doesn’t solve the problem of being priced out of the market, but it offers more options for small businesses to provide health benefits to employees and attract quality employees.” She notes that businesses with fewer than 50 employees are not subject to the employer mandate in the ACA, so they can choose not to offer anything, and Zane finds many are choosing this.

NEXT: How the legislation will help and a call for plan sponsors to take action

Information on U.S. Representative Mike Thompson’s, D-California, website, says the bill will ensure small businesses are allowed to use pre-tax dollars to give employees a defined contribution; allow employees to use these funds as an HRA to purchase health coverage on the individual market, as well as for qualified out-of-pocket medical expenses; and protect small business employers from being unnecessarily financially penalized for providing this option to employees.

Isaacson says right now, the bill is with the Senate Finance Committee and the House Ways and Means Committee, and it has attracted a huge amount of co-sponsors and support. She is concerned that if it doesn’t pass soon, it will be negatively affected by the upcoming election.

Explaining how the bill will help employers, Isaacson says Zane has one small business client with three employees that doesn’t have enough money to buy health benefits, but it would like to dedicate $300 per month for employees to get reimbursed for premiums and other costs. She notes that employees cannot afford lower-deductible health plans, so they are shopping based on premium amounts. For this reason, many are in high-deductible health plans, and allowing employers to offer HRAs will help employees with costs.

“I just think this is such a common sense approach to problems faced in health care market. I think we’re in an age where small businesses need help, and the longer these bills stay in committee, the longer small businesses are suffering,” Isaacson concludes.

Zane Benefits encourages small business owners and those that support them to contact their members of Congress to express the need for passage of this bill. The company provides an easy way to do so on its website.