Health Insurance Costs Remain Top Concern for Small Employers
Rising premiums continue to challenge small businesses, but several strategies can help manage costs without cutting coverage.
AEA Editorial Team
The Challenge
Health insurance remains one of the largest expenses for employers, and small businesses are particularly affected. Without the negotiating leverage of larger organizations, businesses with fewer than 100 employees often face higher per-employee costs and fewer plan options.
Strategies for Managing Costs
Employers have several options for controlling health insurance expenses:
Explore Alternative Funding Arrangements
- Level-funded plans offer predictable monthly costs with potential savings if claims are lower than projected
- Health Reimbursement Arrangements (HRAs) allow employers to reimburse employees for individual coverage
- Association health plans may provide access to larger group rates through employer associations
Optimize Plan Design
- Review deductible and copay structures annually
- Consider offering multiple plan options to let employees choose based on their needs
- Implement or strengthen wellness programs that promote preventive care
Shop the Market
- Work with an experienced broker who understands the small group market
- Compare options across multiple carriers annually
- Consider mid-year plan reviews to identify savings opportunities
The Role of Employer Associations
Employer associations like AEA can help small businesses access benefits programs and group purchasing arrangements that would otherwise be available only to larger organizations. By pooling purchasing power across many small employers, associations can often negotiate more competitive rates and plan options.
What to Do Now
Small employers should start their annual benefits review process early. Gather utilization data, survey employees about their priorities, and work with knowledgeable advisors to evaluate all available options before renewal season.