Creating valuable health insurance options through their employers has become increasingly difficult for many small business owners. The structure of employer-sponsored health insurance is extremely complex, and many small business owners may face financial barriers to healthcare that can be difficult to overcome. Aligning your salaries and benefits to stay competitive with others is also challenging due to increased premiums and out-of-pocket costs related to health insurance.
Understanding the Financial Barriers to Healthcare
Unpredictability of medical costs is at the heart of this issue. When businesses have trouble providing full health insurance due to their own budget challenges, this lowers the amount of support for their employee population relative to accessing health care services. When businesses don’t provide this support, employees find it increasingly difficult to access necessary health care services. This means that employees may have a lower overall quality of life because they prioritize basic living expenses rather than taking care of themselves physically or mentally.
As a result, approximately 17% of American adults in 2024 reported that they delayed or did not receive needed health care because of cost, including those who delayed or did not receive mental health care, along with those who rationed their prescription medications because of cost. This reflects the extent of these financial barriers to accessing health care services for America’s labor force today.
Many entrepreneurs feel powerless to deal with systemic barriers within the health and social service sectors that provide limited options for equitable access to care. To remain competitive and retain employees, business owners must look for proactive approaches to address this issue.
Funding Solutions for Small Businesses
Business owners can pursue multiple financial options to manage cash flow, enable liquidity and create employee benefit programs.
1. Working Capital Loans
Working capital loans are an effective solution for meeting the demands of your company’s short-term working capital needs caused by fluctuations, such as seasonal increases in insurance premiums. Work with your financial institution to secure a working capital loan to allow your company the flexibility to continue its operations while maintaining its ability to provide coverage. While these healthcare business loans can help bridge financial barriers to healthcare and provide you with access to healthcare capital, it’s important for the business owner to manage these loans properly to avoid a long-term liability for the business.
2. SBA Loans
The Small Business Administration (SBA) provides government-backed long-term loans with more favorable loan terms and interest rates than traditional lenders. This makes SBA financing an ideal source of funds for supporting your company’s employee benefits programs or creating a more sustainable employee benefits package. Utilizing SBA financing helps to minimize the financial barriers to healthcare and reduce the effective cost of capital to your company.
3. Alternative Lending Options
Alternate lending sources are available as an option if you cannot obtain financing through a regular lending institution. Alternative lending institutions can assist you in obtaining the money quickly and, in some cases, without the same level of documentation or strictness on requirements, but generally charge higher rates. When you are trying to find funds immediately to help minimize the financial barriers to healthcare that adversely affect both employee wellness and the sustainability of the business, this type of strategy should be one of your considerations.
4. Exploring Public and Specialized Support
In some cases, businesses may also explore programs that provide social assistance loans to assist with the funding of costs associated with serving the needs of disadvantaged segments of the market or specific groups of employees. While they may not be classified as a traditional business loan, these types of programs can be part of a larger strategy to reduce overall business health expenses. Providing access to multiple avenues and implementation of a strategy to alleviate the financial barriers to healthcare will assist in providing a demonstrated commitment to employee success.
Integrating Internal and External Strategies
Integrating the strategic layer of planning into benefit offerings can radically change the way an organization manages benefits and overcomes barriers in health and social care. An organization should think about other ways to develop a plan so that it can enhance operations internally and not just obtain additional financing from outside sources. For example, negotiate a lower group health plan price and use HRAs (Health Reimbursement Accounts) to provide customized, tax-advantaged assistance for the company’s budget and employee requirements.
The combination of utilizing these internal strategies while leveraging these types of loans externally ultimately allows the organization to build a stronger foundation as it relates to the financial support of healthcare. This type of integrated approach is fundamental for today’s entrepreneur who wants to remove the financial impediments associated with accessing quality healthcare and create an employee-centered environment committed to their long-term success.
Final Words
A company is dependent on the well-being of its employees. Therefore, unavoidably, every business’s health depends on its human resources. While the financial barriers to healthcare are significant, they are manageable with proper preparation. If small business owners pursue available working capital, Small Business Administration loans, or alternative ways to borrow money, they can take charge of their financial future to help ensure that their most substantial asset, their employees, remains strong. Providing solutions to these obstacles provides assurances for the long-term viability of the entire organization.
