InsightsNavigating Health Care: Five Takeaways for Small and Mid-Sized Businesses

Offering benefits is crucial for small- and mid-sized businesses (SMBs) and their ability to grow and thrive. High-quality and robust benefits are a competitive differentiator for hiring and retention. Equally importantly, they support healthy and engaged employees – leading to a more productive workforce.

Morgan Health recently led research¹ to more precisely understand how SMBs make tradeoffs to keep health care coverage in place and areas where they need additional support or innovation. Overall, offering health benefits is difficult and SMB leaders struggle with cost and information gaps.

Here’s what the Morgan Health research shows:

1. Offering health care benefits is considered a fundamental business value for SMBs – and employees expect coverage, regardless of company size.

   For many SMBs we interviewed, offering health benefits is not just a strategic business decision but also a reflection of their company culture and values: to care about and invest in employees and their health and well-being. Workers also expect employers of all sizes to offer health benefits. The quality of benefits can be an important differentiator for recruiting and retaining talent.

2. Making financial tradeoffs to maintain continuity in health care coverage is commonplace.

   SMBs generally consider cutting health care benefits as a last resort, while balancing value, recruitment and profit margins. Yet to continue offering benefits, they report difficult business tradeoffs, such as adjusting contribution levels, spending more business leaders’ time to investigate alternative benefit structures, or limiting growth and hiring to sustain health benefits.

3. Relying on outside sources, like brokers, is necessary for SMBs, but they also spend significant time and effort researching and vetting recommendations on their own.

   SMBs often lack in-house resources to evaluate insurance options and instead turn to brokers or Professional Employer Organizations (PEO) for recommendations based on the health care and pricing needs of their business, regulatory compliance, and benefit administration. Our research showed that SMB owners want a responsive, knowledgeable broker who understands and caters to their business needs, helps them manage health care costs and serves as a strategic partner rather than mere intermediaries. However, complexity and opaqueness in health insurance can leave SMB leaders unsure if the recommendations they receive are the best options available.

4. Implementing new, innovative solutions is deemed as a viable option to improve health care offerings, but limited bandwidth and information gaps hinder action.

   SMBs are eager to reduce care costs and satisfy employee needs, yet they face knowledge gaps when it comes to innovations designed to lower costs and improve consumer choice. Some are familiar yet skeptical of alternatives to the fully-insured model — citing financial risk, administrative complexity and potential employee confusion. New solutions, like Individual Coverage Health Reimbursement Arrangements (ICHRAs)² , are gaining uptake, but were unfamiliar to many business owners in our research. Notably, SMBs have a higher barrier to integrating innovative solutions compared to larger companies, primarily due to the lack of having a dedicated Human Resources team to research the tradeoffs and to understand how these models align with their overall strategy.

5. Access to a centralized, unbiased and transparent resource hub is critical to health care decision-making.

   SMBs feel frustrated by the fragmented, often complex and opaque nature of existing benefits resources. They fear uncertainty around costs or making a coverage decision that could negatively impact employees. Today, SMBs rely on a mix of information – typically ranging from brokers and experts, professional networks and peers and their own research to inform decision-making. SMBs seek a resource hub to improve their health benefits knowledge and boost their decision-making confidence.

   Our findings show that more work needs to be done to support SMBs.

   This starts with getting unbiased, transparent information into their hands so that they can make more informed decisions about their benefits and effectively support their employees.

   Efforts should specifically focus on:

   • Education: Invest in education to help SMB leaders better understand health benefits. Provide clear and accessible information in a central place – offering a “one-stop-shop” approach. SMBs have limited bandwidth and fewer resources than large businesses to navigate benefits decisions, but they want to do what’s best for their employees. Additionally, raise awareness of new health benefits options in the market and answer SMB leaders’ questions about how these solutions could work for their business.
   • Transparency: Provide unbiased information about health plan options and offer comparison tools to help leaders pick the best plan for their business. SMBs lack a true marketplace to shop for health insurances and despite new requirements for brokers to disclose any compensation from insurers, many SMBs may not be aware of these incentives when they’re presented with a curated list of plan options. The health insurance and benefits industries should look to other sectors, like travel and finance, that frequently provide comparative tools in a user-friendly interface.
   • Strategic and Administrative Support: Build better support models that address the full spectrum of an SMB’s needs, from compliance and regulatory requirements to strategic guidance about health benefits. Technology can be leveraged to support SMBs in real time and streamline historically administrative tasks so that brokers can spend more time on strategic guidance.
   • Innovative Solutions: Build and scale new solutions that offer SMBs affordable, customizable health plan design with varying levels of financial risk and alleviate administrative burdens. Innovation can stem from advancements in technology to new policy. Options like captives, level-funding, and ICHRAs can offer businesses greater control, flexibility, and cost savings. Solutions should also focus on quality of care and affordability for employees.