Aon Hewitt recently surveyed 350 large employers nationwide, including 99 with offices in Houston. They found that the average cost of health insurance for a Houston employee will go up $4,946 a year, or 12% over last year. The average cost for their employer will increase to $10,221 a year, or 8.7% higher than last year. They attribute these expected increases primarily to healthcare reform. (Houston Chronicle).
Most small businesses would be happy with an 8.7% increase, but they don’t have the buying power or critical mass of a large employer. Our experience in the small business market suggests that their increases will be double those of the large employers. I spoke with a large life and health insurance brokerage a week ago. The owner indicated that renewals that were 10% a year ago are 20% today, and higher.
What does that mean for a small business in difficult economic times? It means your cost to insure your employees is going up unless you make changes to your policy or get creative. What options do you have? You can increase deductibles and co-pays, decrease co-insurance percentages, or make adjustments in coverage to lower premiums, or you can explore creative options like HSAs, HRAs and GAP plans. You can also work with a Professional Employer Organization like G&A to get the purchasing power and critical mass of a larger employer. With no relief in sight until 2014, it’s time to look at all of your options.