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Small Business Employee Benefits and HR Blog

Health Insurance Top Concern for Small Business Owners in 2014

Looking ahead to 2014, health insurance is a top concern for small and medium business owners. In fact, health care costs and health care reform weigh heavily on business decisions. Over 1 in 5 (22%) business owners cited health care costs as having the greatest impact on their business decisions, followed by economic growth (21%), and health care reform (14%). This is according to recent research by the Principal Financial Group. The survey polled ~600 business owners with up to 500 employees in July 2013. Here's additional findings on small and medium business owners top concerns for 2014.

Optimistic Outlook, But Cautious to Spend

Overall, small and medium business owners are feeling more optimistic than last year about the economy and business financials. For example, nearly a third (31%) of business owners are optimistic about the economic outlook for 2014, up from 26% last year. Almost half (48%) say their business financials have improved compared to last year at this time and even more (55%) believe their business financials will improve in the next twelve months.

economic outlook

Source: Principal Financial Group  

Will the optimistic outlook lead to job creation and increased spending? Small and medium business owners are still cautious. Nearly two-thirds (62%) said they have surplus capital but they aren't spending it at this point. Only one-third (35%, down from 42% last year) of business owners plan to add to staff. Fourteen percent plan to reduce staff.

Health Insurance Top Concern for Business Owners

According to Principal's research, the economic factor having the greatest impact on business decisions is the cost of health care. Other top factors include economic growth and health care reform.

healthcare impact

Source: Principal Financial Group  

When asked about the Affordable Care Act (ACA), three quarters of business owners say they completely understand or understand some parts of health reform law. Many business owners say they will take the following actions (or non-action) as a result of health reform law:

  • 17% plan to take no action, while one in five don't know what action they will take.

  • 22% plan to keep their workforce under 50 employees to avoid the employer mandate (now going into effect in 2015).

  • Only 8% say they will start offering health insurance as a result of the health reform law.

PPACA action small business

Source: Principal Financial Group  

 

Other Small Business Trends

In addition to the cost of health insurance and financial growth, Principal found that these trends were top-of-mind for small and medium businesses going into 2014:

1. Retirement savings and readiness: Nearly three-fourths (74%) of business owners are aware of the amount of money they need in order to live comfortably in retirement. Six in ten (59%) believe they are saving enough.

2. Working with financial professionals: Nearly two-thirds (61%) of business owners work with financial professionals for their personal financial situation and/or business or employee benefits.

3. Family: When asked who had the most influence on their professional success, owners put their spouse (25%) at the top of the list. Over half of business owners (55%) have a succession plan; of those 39% plan to transition the business to family members. And, more than half of business owners (56%) cite a family-like culture as one of the advantages of working at a smaller company.

Read full survey and findings: Principal Financial Group

What are your top small business concerns for 2014? Leave a comment below.

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