We are going to look at the impact COVID-19 is having on employer-sponsored (group) health insurance, and more widely on small business insurance in general. But first, we need to understand how it concerns us, the ‘average American’.
For most of us our involvement with insurance, as individuals or as a family, is related to (1) Health (2) Auto (3) Property (4) Life.
In this article, we concentrate on health and in particular on small business and employer-sponsored health insurance. WHY? Because over 50% of the working population (120m+) is employed by a ‘small business’ (less than 500 employees) and there are around 28 million small businesses in the US.
Mind you, 22 million of these are ‘self-employed’ with no additional employees (so-called non-employers)
How does small business insurance affect me?
In the short term, the COVID-19 pandemic has had the effect of shrinking the global economy both for manufactured goods, industrial and domestic, and limited the opportunities for service/leisure industries. The consequence has been a worldwide increase in unemployment. The USA is not immune to this global trend. Rising unemployment figures and claims for benefits make this self-evident.
Apart from the loss of income, which in most cases is at least offset by unemployment benefits, the greatest worry is maintaining health insurance coverage in the event of becoming unemployed or changing jobs. Approximately 80% of the US population benefits from employer (group) sponsored health insurance. If your employment has been affected by the COVID-19 pandemic it is no consolation to know that you are not alone. It is important to know how to minimize the effect on you and your dependents.
For a full description of the options open to you see our article ‘Ways to get covered if you lose coverage due to COVID-19’
How does this affect small businesses?
The definition of a ‘small business’ is one with less than 500 employees or the full-time equivalent (FTE). But remember, most of them (22 million – nearly 80%) are self-employed and even more are husband and wife teams. In some states, this is sufficient to qualify for the group (employer) sponsored insurance. However, in most states, the minimum number of employees is 3, one of whom may be the employer’s spouse.
If you have been affected by the COVID-19 pandemic, either as an employer or as an individual, you should consider the protection that business insurances offer. See the employer’s health insurance.
You may never have thought of yourself as an ‘employer’ but now might be the time to join the growing band of small businesses that fuel the growth of individual wealth and the economy as a whole.
As an existing business owner, you should review your policies with your insurance agent/broker in the light of the protection your existing plans already provide.
As a potentially self-employed person, you should consider the options open to you to guard against both traditional events and the abnormal impact of COVID-19.
In broad terms, business insurances fall into three categories:
- Those that cover the risks of the business itself and
- Those that affect the stockholders (the individuals or groups) who, one way or another, are involved in the business. These may be, for example, the owners, employees, customers, and in some cases the general public.
- In the third category are the classes of insurance, usually under the umbrella term ‘BENEFITS’, where the employer and employee share the costs of health insurance (and in most cases supplementary coverage).
In the first category, there are plans to cover commercial property insurance, business interruption insurance, communicable and infectious disease coverage, civil authority coverage, and political risk insurance (this will only be appropriate if you do business with countries outside US jurisdiction).
In the second category, Commercial General Liability offers protection from claims made by customers, clients, and the general public. Such policies are tailored to specific industries e.g. production or service. Workers’ compensation insurance covers employees able to link a specific illness to their workplace.
The third category is that which most directly affects employees both in terms of motivation and loyalty and its significance in terms of business failure. For more details of these and related employer insurance options see the TrueCoverage ‘Employer section’. But remember you should review with your broker (existing policies) the impact of COVID-19.