The evolving field of small business health insurance advice

Three primary topics of concern

by Tony Novak, CPA, MBA, MT

For just over 30 years I've offered health insurance advice to small business owners. It used to be a lonely field of practice. The people most active in the small business benefits planning field were insurance agents and brokers. Implementation of the Affordable Care Act (ACA) changed that. Many accountants and attorneys today report that they often receive questions from clients about health care issues.

The questions I receive typically fall into three categories:

1) Small business cost control - The cost of health care for owners and employees has long been a top concern of small business owners. ACA has only accelerated that concern. While the rate of health care inflation has backed off over the past few years, forecasts of double digit inflation for small businesses will heat up concerns next year. For businesses with more than 50 employees, a new concern of avoiding ACA shared responsibility tax penalties is added to the mix.

2) Discontented consumers - Consumers who have a gripe with the health care system, an insurance company, ACA, an agent (often a telephone sales call center) or government insurance exchange frequently search online and reach out to find another source of help. This year ACA added new concerns about potential individual mandate tax penalties for not having the required type of insurance coverage. The fact is that we still don't have a good system of getting qualified independent advice to individual consumers.

3) Executive benefit supplements - Higher paid executives are accustomed to receiving full health coverage as a tax free benefit. Provisions of ACA and the resulting cost control measures taken by employers (like dropping group insurance plans) threaten to reduce these executive benefits. Popular benefits like "Cadillac insurance" plans and Health Reimbursement Arrangements and are dying out as a result of ACA. Companies are responding by moving toward the allowable supplemental benefits including supplemental insurance exempted by ACA and cash accounts like non-employer Health Savings Accounts.

I encourage small businesses to consider the entire range of available options before focusing on any single solution. (This is important because most new clients have already considered a solution they read about online before they contact me. The solution they ultimately choose is not the same as the solution they first read about). It is usually possible to review the entire health care planning situation of a small business - including the different interests of the owners and the employees - in less than an hour. The payoff of this focused financial planning could turn out to yield a huge return on investment over the coming year.