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Small Business Employee Benefits and HR Blog

Survey - Small Businesses Saying 'No Thanks' to SHOP Exchanges, Yes to Alternatives

A majority of US small businesses are looking to health benefit options outside of the Small Business SHOP Exchanges, with many looking to more affordable health benefit solutions for 2014. This is according to a November survey of small and micro businesses by the National Association for the Self-Employed (NASE).

Survey - Small businesses saying 'no-thanks' to SHOP

SHOP_Small_Businesses_Saying_No_Thanks

The NASE membership survey polled ~500 small and micro-business owners (< 50 employees) from across the country. The survey was conducted November 7th – 20th. 

The survey found that nearly 60% of respondents believe there is a “low” or “very low” chance they’ll be able to secure both affordable and comprehensive (traditional) coverage in 2014. 

According to NASE's Director of Government Affairs Katie Vlietstra, "This frustration is pushing many to look for alternative options for health care." (Source: NASE.)

Additional highlights of the survey include:

  • About half of the respondents had visited HealthCare.gov. Of these, over 60% of them experienced technical issues and/or website glitches.

  • Over 30% of those who visited HealthCare.gov have now decided to explore options outside of the SHOP Exchange.

  • Nearly 9% of those able to visit HealthCare.gov successfully enrolled in a small group health insurance plan for 2014.

  • Almost 17% of respondents said they’d be forgoing health insurance in 2014 due to costs.

The NASE survey can be found here.

Why are small businesses foregoing the SHOP?

According to the survey, cost is a major issue. Recently, we also wrote about how small businesses were passing up the SHOP Exchanges and delved a little deeper into the 'why'. Here's a summary of what we wrote about it that article:

  • Small businesses hoped the SHOP exchanges would help them offer affordable health benefits that employees value. As the survey reflected, it's not. Premiums still cost more in the SHOP exchange policies (i.e. the premiums are still cost prohibitive for most small businesses). 

  • Competition is low in the SHOP exchanges (i.e. in most states there is still little choice for employees, and little competition to drive costs down).

  • The premium subsidies available in the individual exchanges are much more attractive than the small business tax credits available on the SHOP.

Small businesses looking for health insurance alternativesLike_small_business_health_insurance_options

Because of the cost barriers of group health insurance (including the SHOP), and because of the new advantages and incentives on the individual health insurance market, small businesses are turning to health insurance options outside of the small group market.

One of the trending alternatives is a defined contribution health plan, with or without a private exchange.

What is defined contribution and how does it compare to the SHOP? See this article.

What do you think? Are you seeing small businesses forego the SHOP for other health insurance options? Leave a comment below.