Small Businesses Win With New Healthcare Purchasing Option
Monday, February 27, 2012
Against the backdrop of healthcare reform and a still sluggish economy, small businesses increasingly have more options for purchasing healthcare.
Co-ops Catch On In Massachusetts
This week, the Retailers Association of Massachusetts unveiled its new group purchasing co-op for its 4,000 members.
The co-op is allowed under a state law passed in 2010 that permits small business employers to band together as a large group to negotiate its own healthcare rates. By joining the co-op, small employers can expect to see premium discounts of between 12-20%. The catch? It offers a limited network with just one health system, Steward Healthcare System, and one insurer, Fallon Community Health Plan.
The Retailers Association isn’t the only group considering a co-op. To date, five other co-ops are in the works in Massachusetts, including one for the Chambers of Commerce.
State Exchanges Available in 2014
State exchanges will offer a new marketplace for small employers to purchase insurance. Designed to make it easier for these businesses to compare health plans and offer their employees choice in coverage without higher premiums, the exchanges also offer employers an out by empowering employees to purchase coverage individually.
The growing interest in co-ops, however, suggests small businesses still believe there is strength in numbers and will want to continue to provide the insurance to their employees.
PEOs a Growing Option
Exchanges and co-ops aren’t the only options for small businesses. Professional employer organizations (PEOs) are a $50 billion dollar industry and are catching on quickly – currently growing 20% per year.
With a PEO, workers become co-employees of both the employer and the PEO. The employer maintains direction over activities like hiring, setting job responsibilities and managing workers’ actions while the PEO handles employee administration functions, such as HR, payroll, benefits, workers’ compensation and retirement plans.
The benefit? Small employers lower their risk exposure, save on staffing expenses and reduce their administrative burden. And, because a PEO aggregates all of its clients’ employees together, it can secure better pricing so employers can offer a more competitive benefits package.
Amidst all the change, one thing is certain: small businesses are being heard. And the market is responding with more options, not less.
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