In a challenging workforce and health insurance environment, offering small business clients an excepted benefits health insurance plan is one solution.
Small to mid-size businesses have struggled with luring and keeping top talent due to the inability to afford a competitive compensation package that includes optimal healthcare benefits. This issue was exacerbated in the aftermath of COVID-19, which has caused an earthquake in the U.S. workforce and job market, as well as in how companies operate.
Due to the pandemic, seismic numbers of lower-level employees have been terminated and many of their positions have been eradicated, with the bottom-line goal of creating a leaner, meaner organization. High-level employees—those critical to company profits and growth—have filled the gaps with increased workloads and hours.
The result: Major burnout and attrition to other companies with better compensation plans; a red-hot demand for top performers; and what's been dubbed “The Great Migration."
According to a June 2021 survey conducted by Monster Worldwide, a whopping 95% of workers are considering changing jobs due to burnout. This data aligns with research by other staffing and recruitments firms that finds employers are struggling to keep and attract top talent amid an increasingly competitive job market. A recent study by Robert Half, a leading, worldwide talent-solutions firm, says that more than 90% of senior managers find it challenging to source adequately skilled professionals in today's environment.
Meanwhile, group health insurance costs are up an estimated 5.3% in 2021, with a predicted 6.5% rise for 2022, according Sankaty Light Benefits internal data. What remains the same is the importance of healthcare benefits beyond salary to key employees—the vast majority of whom make job decisions based on health benefits, seek coverage far beyond an employer's base medical plan, and shop job opportunities with health benefits in mind, according to America's Health Insurance Plans.
How can you help your small business clients not only recruit—but also retain—top talent affordably in this challenging workforce and health insurance environment? By offering them an excepted benefits health insurance plan.
These fully insured, tax-advantaged plans are also referred to as “select," “executive" or “key" employee medical cost reimbursement plans and are not to be confused with health savings accounts (HSAs), health reimbursement accounts (HRAs) or other consumer health accounts. Unlike the latter, these plans are not subject to Affordable Care Act requirements, so they can be offered to select employees at the employer's discretion with a minimum of three to 50 plan participants. Plus, they offer true insurance coverage, benefits and value.
These non-traditional health plans provide typically tax-exempt reimbursement to select employees and their eligible dependents for medical costs not covered by their employer's primary health plan, including deductibles, co-pays, co-insurance and other out-of-pocket costs.
Additionally, they cover a broad range of expenses rarely covered by most employer base plans, such as vision, dental and orthodontic, hearing loss, in-home nursing, psychiatric care, speech therapy, infertility treatment, substance abuse treatment and facilities, and many other medical services. Generally, if an expense is medically necessary and qualifies under Section 213(d) of the IRS Code, it is eligible for reimbursement.
With these plans, all fixed and variable premium costs are tax-deductible for employers. Fixed premium costs vary by plan provider but the best of these charge an annual, instead of monthly, premium. Variable premiums incur only if and when employee claims are approved. Some plans also provide accidental death and dismemberment coverage, 24/7 worldwide coverage and healthcare concierge travel services at no additional cost.
Generally, these plans can be added to any employer's underlying group plan, individual policy, spousal policy or Medicare plan. They typically have no pre-existing condition exclusions, very limited eligibility requirements, and no enrollment waiting periods.
Excepted benefits plans offer your clients a cost-effective way to boost primary health plan benefits for select employees; recruit, retain and reward top talent; and differentiate their company's total compensation package from competitors. Importantly, they offer health insurance agents and brokers a powerful product that can boost their business value as a problem solver for their clients' insurance needs, which can boost their business sales with existing and new clients.
The course of the pandemic may still be uncertain. But this is certain: businesses that use affordable, excepted benefits health plans to boost coverage for key hires will be better able to recruit and keep the talent they need.
Michael S. Fawcett is the executive vice president and chief operations officer of Sankaty Light Benefits, a health insurance and services company that provides businesses with cost-effective solutions to today's costly healthcare environment and highly competitive workplace, such as its new ExecSelect™ plan.