Impact of ACA Subsidy Expiration on Small Businesses and Telehealth Adoption

The expiration of subsidies from the Affordable Care Act (ACA) Marketplace at the end of last year is projected to leave 4.8 million individuals uninsured by 2026. Small businesses are feeling the impact through rising plan premiums. According to the Kaiser Family Foundation (KFF), small business owners, employees, and self-employed individuals make up nearly half of the ACA Marketplace plan holders, with a significant reliance on this coverage.

Eric and Lisa Frankenfeld, chiropractic office owners, decided against renewing their health insurance for 2026 after their monthly premiums skyrocketed from $340 to $1,928. Similarly, Vermont small business owners Kathy and Jeffrey Many faced a premium increase from $625 to $2,670 per month, prompting them to forgo coverage. These instances highlight the financial burden that small business owners face when attempting to provide health insurance, underscoring the challenges amidst rising premium costs.

The Employee Benefit Research Institute (EBRI) reports that only 49% of employers currently offer health benefits, with small businesses most frequently discontinuing these offerings. Healthcare costs are predicted to rise by 9% this year, which could push the average cost per employee past $17,000. Paul Fronstin, Ph.D., from EBRI, warned that premium increases outstripping wage growth and inflation might compel small companies to discontinue health plan sponsorship, particularly those with fewer than 100 employees.

In light of these challenges, small businesses are increasingly considering telehealth services as a viable alternative for employee healthcare coverage. While not a substitute for traditional insurance, telehealth addresses essential medical and mental health needs, potentially enhancing workforce retention and productivity. These services offer 24/7 access to healthcare professionals via a subscription model, presenting a cost-effective option for businesses.

Wendy Jordan of Jordan Capital Consulting observes the growing trend of telehealth packages being adopted by business and trade associations, as well as local chambers of commerce. For many small businesses, providing comprehensive health insurance is financially out of reach. However, embracing these virtual care options offers a potential solution to support employees, aiding in retention and contributing to the long-term stability of businesses.