New entrepreneurs hesitate to offer health insurance

Data from NFIB’s small-business poll shows 52 percent of small-business owners do not offer employee health insurance or a subsidy for purchasing insurance.

“It’s much better for employee morale if a small-business owner never offers health benefits than it is to offer them and then be forced to take it away because it is too expensive to continue,” said William J. Dennis, NFIB’s senior research fellow, in a news release. “Small-business owners experience considerable turmoil in their early years. They often experience cash flow problems and are reluctant to incur additional expenses such as health insurance. What’s new to this picture is that it appears that new small-business owners are waiting longer or choosing not to offer health insurance benefits to their employees at all.”

Not counting those who change insurers or go out of business, between 1 percent and 2 percent of small employers drop health insurance benefits altogether each year, the survey said.

Of the 47 percent of small employers who do offer some type of employee health benefit, 36 percent offer insurance to all or most full-time employees, 5 percent offer insurance to some or a few full-time employees, and 6 percent offer premium reimbursement to employees who purchase health insurance on their own.

According to the poll, owners or managers are most likely to shop for benefits on behalf of small businesses, often relying on insurance agents or brokers for guidance.

Survey data found that agents/brokers did not raise the subject of health savings accounts in 59 percent of cases involving their discussion of employee health insurance with small employers.

“This poll tells us that if small-business owners want to know about all of their health insurance options, they need to conduct their own research. They need to be able to ask their insurance agents very pointed questions about HSAs and other health insurance options,” Dennis said.[[In-content Ad]]