Small Business Tracking Study – Healthcare Detail

Wave 1: May 2015

It’s our business to know your business

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We strive to understand what

makes Small Businesses tick

To learn about their perceptions,

challenges & needs

Across day-to-day areas that make their

business run: Technology, Healthcare, Finance and Insurance

OUR GOAL: Make our marketing

work harder by getting smarter about our

audience

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Coffee Shop

We’re tracking trends to better speak with small businesses We want to know what makes them tick, what keeps them going, what is top of mind every day and every minute.

How do I stay on top of new government rules

and regulations?

How do I find new customers when there’s

so much more competition out there?

How do I keep up with new technology innovations and give my business the tools

we need to succeed?

We have begun our first conversations and created a baseline

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505 small business decision-makers reached through an online survey

All across the U.S. and different make-ups:

Years in Business23% 1 to 5 years

22% 6 to 10 years20% 11 to 19 years35% 20+ years

We sampled a wide range of business sizes and verticals to ensure we had a representative population

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40%

21%

13%

13%

11%Number of Employees2 to 4

5 to 910 to 1920 to 4950 to 99

18% Home-based

14% 19% 17% 19% 21% 9%

Revenue Split

$25-100K $100-250K $250-500K $500K-1M $1M-2M $5M+

14% Construction-based

Overall, they believe their businesses are growing and are optimistic for the future

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Last year, did your business experience…

Rapid growth (more than 10%) 14%Slow but steady growth 45%No change 28%Slow but steady contraction 10%Rapid contraction (more than 10%) 3%Not sure 1%

Next year, do you think your business will have…

Rapid growth (more than 10%) 19%Slow but steady growth 50%No change 22%Slow but steady contraction 6%Rapid contraction (more than 10%) 1%Not sure 2%

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We asked businesses about different aspects of their day-to-day business

Finance TechnologyInsurance Healthcare

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Before diving into Healthcare, some interesting insights and takeaways from other areas

Finance TechnologyInsurance Healthcare

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In Insurance, business size dictates with whom they make their actual purchases

Businesses with 20+ employees are far more likely to purchase directly from an insurance company.

Smaller businesses are more likely to purchase through a licensed broker, agent, or advisor.

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Top business financial concerns vary by business size

2-4 5-19 20-49 50-9915%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

Concerns About Dealing With Financial Issues

Dealing with business filing requirements

Meeting financial reporting requirements

Collecting your accounts receivable

Finding the right retirement benefits offerings for employees

Deciding whether to offer retirement savings benefits to employees

Getting access to lines of credit Encouraging/Helping employees take

advantage of the retirement benefits package

• Small companies are most concerned with filing and reporting requirements, and accounts receivable.

• Larger businesses are as concerned with filing and reporting requirements as they are with decisions about employee benefits.

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Small business owners are upgrading but being kept up at night by cyber security concerns

Keeping up with hardware and software upgrades is the #1 technology initiative businesses deal with, followed by mobile access, social media

presence, and especially cyber security.

Companies that have undergone rapid growth in the last year are far more concerned about their technology needs than other companies.

The faster the growth, the more they think about technology needs with special emphasis on security.

Many insights that we found can be applied across the board

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Technology Finance Insurance

Keeping up with hardware & software upgrades is the #1 technology initiative businesses deal with

Rapidly growing companies are MUCH more

concerned about their company’s future needs

Universal Insight:Small businesses want

their employees to be as productive as possible, and

would lean more on providers & partners who

point them to the right products and services

Universal Insight:Businesses that are

growing quickly are looking for solutions that will keep

them on the path of success.

Universal Insight:In addition to consultants,

online research is a top location for business

owners to research options for their business.

Where do you get your information:42% Online

Research

What aresmall businesses thinking about

Healthcare?

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Online research and consultants are important methods for staying informed regardless of business size

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   Total 2-4 5-19 20-49 50-99

Researched online 56% 60% 53% 52% 59%

Contacted/met with an insurance broker or specialist 37% 34% 34% 43% 50%

Talked about it with colleagues you met at local networking events 27% 19% 30% 38% 28%

Contacted/met with a financial adviser or accountant 21% 19% 19% 29% 22%

Attended conferences or informational seminars 16% 12% 13% 21% 30%

Contacted/met with a lawyer 10% 6% 11% 14% 20%

Other 1% - 2% 2% -

None of these 14% 17% 16% 4% 13%

Health Insurance Information Channels

Smaller businesses are buying employee health insurance through insurance brokers or agents

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 Total  2-4 5-19 20-49 50-99

Through a licensed broker, agent, or advisor 40% 49% 44% 33% 27%

Directly from an insurance company (by phone with a customer service rep) 33% 25% 30% 40% 46%

Directly from an insurance company (through the company website) 23% 13% 21% 31% 34%

By reimbursing employees that purchase health insurance on their own 14% 13% 12% 10% 27%

Through a SHOP Exchange or Marketplace (Small business Health Options Program) 14% 11% 20% 21% -

Health Insurance Purchase Channels

Whereas larger companies are buying directly from the insurance company

They are satisfied at managing healthcare needs

Very Somewhat Not satisfied

35%30%

19%

Satisfaction with Company’s Ability to Manage Healthcare Needs

Most small businesses are satisfied with their ability to manage the organization’s health insurance needs.

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Most small businesses offer benefits because “it is the right thing to do”

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  Total 2-4 5-19 20-49 50-99

You and/or management feels it is the right thing to do 57% 60% 54% 46% 71%

As part of a total compensation package for employees 45% 46% 40% 58% 39%

To attract and retain talented employees 32% 29% 31% 29% 44%

To be competitive with other businesses in your sector 26% 18% 26% 38% 29%

Because of the Affordable Care Act (ACA) 25% 24% 30% 21% 22%

Other 2% 6% - - -

Why Offer Health Insurance?

2-5 5-19 0-49 50-99

50%64%

86% 89%

Offer Health Insurance to Employees

Like other areas, small businesses are most concerned about health insurance costs and value

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2-4 5-19 20-49 50-9940%

45%

50%

55%

60%

65%

70%

75%

80%

Concerns about Employee Health Insurance

Higher premiums, costs, rate increases

Diminished value for the money

Increased complexity

Diminished plan quality/coverage

Keeping up with changes in the law

Whether employees can get better health benefits through the exchanges

Larger companies are less focused on costs and more about complexity, keeping up with changes in the law, and whether employees can get better coverage through the exchanges

Respondents think ACA has benefited their employees — From better health and morale, to financial benefits

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Employees’ health

Employees’ morale

Employees’ financial circumstances

The business as a whole

Business profitability

0% 10% 20% 30% 40% 50% 60%

28%

25%

22%

20%

20%

22%

24%

22%

23%

17%

Perceived Benefit of Healthcare Reform to Employees and Business

Somewhat beneficial Top-2

Businesses satisfied with their organizations’ ability to manage their healthcare are more likely to see greater benefit from ACA

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Perceived Benefit of Healthcare Reform to Employees and Business(By Level of Satisfaction)

Business profitability

The business as a whole

Employees’ financial circumstances

Employees’ morale

Employees’ health

50%

50%

54%

53%

56%

43%

54%

52%

60%

61%

16%

26%

25%

34%

33%

Very Satisfied with orga-nization's ability to man-age healthcare

Somewhat Satisfied with organization's ability to manage healthcare

Neutral/Dissatisfied with organization's ability to manage healthcare

The more confident and educated they are about their organizations’ healthcare, the more they understand how Healthcare Reform can help

  2-4 5-19 20-49 50-99

Will offer benefits through private exchange 10% 21% 41% 48%

No change 52% 47% 34% 35%

Will drop/dropped coverage 8% 7% 5% 9%

No decisions yet 23% 20% 14% 7%

Not sure 7% 5% 5% 2%

The majority of small businesses report no change due to Healthcare Reform

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23%

46%

7%

19%

5%

Will offer benefits through private exchange

No change

Will drop coverage

No decision yet

Not sure

Healthcare Reform Impact on Employee Health Benefits Offerings

Half of larger organizations included in the employer mandate, indicate that they will begin offering health benefits to employees

- Few are planning to drop coverage as a result of ACA and the public exchanges now available to employees

- Despite the ACA mandate aimed at companies with 50+ employees, businesses with 20-49 employees are nearly as likely as those 50+ to say they will begin offering health benefits through a private exchange

Looking at changes now

< 1 year ago 1-2 years ago 3-5 years ago 5+ years ago

14%

32% 32%

10%8%

Made Changes to Employee Health Benefits…

Within the last year One or more years ago

Businesses who have made changes under the ACA are slightly more likely to find the process of managing the company’s health benefits to be “more complex” and fewer say “easy”

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Managing employee health benefits is…

18% “easier than it was”

35% “the same”

42% “more complex”

Managing employee health benefits is…

24% “easier than it was”

38% “the same”

34% “more complex”

6% have never made changes

Larger companies are more familiar with specific rules of Healthcare Reform

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2-4 5-19 20-49 50-9940%

45%

50%

55%

60%

65%

70%

75%

80%

85%

Familiarity with ACA Rules

Businesses with <51 employees can purchase health insurance through

the SHOP Exchange (Only asked to companies with <50 employees)

Tax breaks are provided to small business who participate

No penalties if your business opts to not participate

Businesses with under 50 employees are more receptive to the SHOP marketplace

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Extremely important Very important Somewhat important Not too important Not at all important

16%

26%23%

12%14%

20%

28%

22%

11% 11%

23%

45%

20%

5% 5%

2-4 5-19 20-49

Importance of SHOP Marketplace

Although SHOP seems appealing, the process and user experience may be the reason many businesses may choose to lean on brokers or agents

We want to get you involved

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What would you like to know about your audience?

- Let’s work together to craft a questionnaire specific to your objectives and target market

- We’ll then use those findings to craft data-driven insights to aid all aspects of your strategic marketing efforts

We are offering our partners the opportunity to take part in the next phaseof our tracking study

Thank you