The United States labor force is built on the shoulders of small businesses. Over one-third of the workforce is employed by a firm with under 100 employees — whether that be in hospitality, food services, or startups. This number represents over 40 million employees[1], a number that with the fortune of a thriving economy, highlighted by the recent jobs report, will only continue to grow[2]. But the positivity of the jobs report doesn’t seem to be resonating with small business owners who are feeling something else entirely.
The National Federation of Independent Businesses has found that the optimism of small and independent business owners has waned. Their “Small Business Optimism Index” took into account small business plans to increase employment and inventories, as well as their expectations of personal sales and overall economic and credit improvement, all of which declined from December 2015[3]. The report points to the largest economic challenges facing small businesses today: balancing affordability with growth.
This balancing act has long been witnessed in the small business health insurance market where consistently the majority of small businesses have not offered health insurance benefits primarily out of fears of affordability. Oddly enough, this reality has not changed much since the passage of the Affordable Care Act[4].
Many provisions within the health care law incentivize small business employers to consider offering benefits, but without the employer mandate impacting small businesses with under 50 employees, many continue to forgo the opportunity. In fact, over half of all small businesses have continued to not offer health insurance[5]. These small businesses make up the bulk of the working uninsured[6] who, in a prosperous economy, are looking for competitive benefits.
What most of these small business employers do not know, however, are the measures within the Affordable Care Act that present a realistic opportunity to offer competitive benefits. This includes the existence of the Small Business Tax Credit on Small Group plans (with eligibility for those with under 25 employees salaried at $50,000 on average), and the flexibility of small business owners to send employees to the new individual marketplaces to enroll in their own plan. Since the average income of these small business employees is under 400 percent of the Federal Poverty Level, many will be either eligible for Medicaid or cost reducing government subsidies.
But communicating this to a receptive small business audience is much easier said than done. Getting to this level of understanding in a complex market requires expert attention. However, there is one industry that already has a captivated audience, and that’s brokers.
The vast majority of small businesses already use brokers to guide their health insurance decisions — only brokers are focusing on the wrong market of small businesses — those of higher income that continuously offer health insurance. Although this market offers a steady and reliable commission, they don’t present the same untapped opportunity as the working uninsured. The problem is, brokers currently don’t have the tools to properly reach this market segment and anticipate their needs across all ages and incomes.
Without the proper technology to meet the working uninsured wherever they are, brokers are left struggling to be the needed educational resource and active advocate for small businesses dangling in the balancing act of affordability and growth. Until then, the unmet needs of these small businesses are met by an unanswered market opportunity for the brokers that are best equipped to tackle one of small businesses largest challenges.
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