Desperate for workers, small businesses increase health coverage

New Orleans restaurant Boucherie is touting its new health care plan when hiring staff. Combined with a 30% pay rise, this helped the restaurant survive the Great Resignation and attract new workers.

The two-site business, which includes the gourmet butcher shop and the Bourrée at Boucherie smokehouse, is an example of the efforts of small businesses to address the current labor shortage.

“Since the big resignation, we’ve really tried anything,” said commercial director Jack Fredericks. The company began to experience a labor shortage in 2021.

Boucherie is not alone. It is part of the arms race to attract and retain workers at a time of rising demand and reinvigorated labor movements demanding better wages and working conditions.

Small businesses have long struggled to pay for expensive health benefits. As health care costs rose, outpacing inflation, the percentage of workers covered at companies with 3 to 199 employees fell from 71% in 2001 to 60%, according to the Kaiser Family Foundation. 2021 Employer Health Benefits Survey.

Boucherie began offering a UnitedHealthcare plan in the fall to its senior managers, such as general managers and kitchen staff, as well as employees who work 30 or more hours, Fredericks said. Six employees are on the plan.

“What we were going through was when we had normal turnover, we couldn’t find anyone,” Fredericks said. “No one was responding to job offers.”

The company recently increased its base hourly wage by about 30% in addition to offering health insurance. The insurance is “definitely something that has helped,” Fredericks said. “That’s the first thing we’re leading with right now.”

Recruitment Arms Race

The restaurant industry, especially smaller independent restaurants, has long struggled to attract and retain workers, said Clinton Wolf, senior vice president of health and insurance services at the National Restaurant Association.

“Over the past few months, I’ve definitely seen more small restaurants come up asking what they can do with their health benefits,” Wolf said.

Low-wage workers, Black Americans, Asian Americans and people working in industries such as restaurants are “much more likely than others to be thinking about quitting,” said practice manager Melissa Swift. transformation of the professional services company Mercer for the United States and Canada. . “When we looked at why people would stay or leave, No. 1 is always pay and benefits.”

Hourly wages are rising, said Tracy Watts, senior partner and national head of U.S. health policy at Mercer. For low-wage workers, “suddenly you have a lot of job choices at the same hourly wage,” she said. Adding health benefits makes it easier for workers to decide on job offers.

More than money

Nebraska Furniture Mart, which has four locations in the Midwest and Texas, has spent $11 million on pay raises on top of annual merit increases, but that’s not enough to keep workers.

“They want better benefits, they want work-life balance, they want career development,” said Megan Berry Barlow, chief human resources officer.

The Omaha-based company, which spent nearly $34 million in 2021 to cover about 5,500 members on its health plans, will offer a high-deductible health plan to employees for free in 2022, and it is debating to offer it to families free of charge as well. It will also offer eligible employees health benefits in 60 days instead of 90 starting this year.

Beyond wages, health insurance is a signal that employers will invest in their workforce, said Jack Hooper, co-founder and CEO of Dallas-based Take Command. Take Command administers Health Reimbursement Accounts, which allow employers to fund their own individual health plans that comply with the Affordable Care Act.

“Benefits make it seem like you care about them as an employer, and that’s what creates that sticky retention that they want,” he said.

Boucherie pays about $140 a month for individual employee plans, while employees pay about $150 a month, Fredericks said. The restaurant raised its prices, but a 30% hike would have been too steep for customers. To cope with rising costs, it is focusing on expanding its business of providing school meals to private schools, he said.

More companies are diving into

Hooper, saw “a sharp increase in the number of employers offering coverage that had never offered it before,” when business began to pick up after the initial pandemic shutdown in the spring of 2020.

Previously, 60% of their clients didn’t know about benefits. Today, 80% are. In November, Take Command added about 3,000 corporate customers that had fewer than 50 full-time employees — who don’t have to provide benefits under the Affordable Care Act — double what it had. before the pandemic.

Many small employers cover their employees using Individually Covered Health Care Reimbursement Arrangements (ICHRAs), Hooper said. Employers can reimburse premiums and disbursements through ICHRAs for employees enrolled in individual health insurance coverage that meets ACA requirements, such as plans purchased through Obamacare marketplaces.

Blue Cross Blue Shield plans, a major source of coverage for small businesses, are seeing increased activity.

The insurer’s small employer members grew from 12.6 million members in the first quarter of 2020 to 12.2 million members in the first quarter of 2021, said Kris Haltmeyer, vice president of legislative and regulatory policy at Blue. Cross Blue Shield Association. However, the number of small employers is growing, reaching June 2020 levels, he said.

“There’s always a labor shortage, and so a lot of people are offering health insurance,” Fredericks said. “It’s a combination of wage increases and health insurance. We had to do both to make it a great place to work.

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