Karen Kerrigan, President and CEO of the Small Business and Entrepreneurship Council (SBE Council), joins us to unpack one of the most important decisions a small business can make: how to offer health coverage. Jeffrey Snyder, Broadcast Retirement Network Karen, it’s great to see you. Thanks for popping by the program this morning. Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council Great to be with you, Jeff. Jeffrey Snyder, Broadcast Retirement Network It’s a pleasure to be with you. Thank you so much. And I wanna ask you, before we get into healthcare and the choice accounts and what that means, I wanna pull back because your organization represents entrepreneurs, small businesses. Affordability is a challenge for many of us out there. Many Americans, I would say the majority of Americans. How are our small businesses and entrepreneurs doing right now? Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council That’s a really good question and a timely one, Jeff. We just came out of the field with a survey or a small business checkup survey. And it’s a good news story in terms of the resiliency of small business owners across this country. I mean, they have been faced with a lot of key challenges over the past five, seven years or more in terms of deflationary pressures, in terms of competition, technology changes in the marketplace. And our survey found that 81% of them are meeting their goals financially for this year. And they are pretty optimistic, although they do have continued concerns. And I would say heightened concerns compared to earlier in the year about inflation, the economy, where the economy is headed. I mean, obviously gas and energy costs have become a bigger concern, but the good news is they’re adapting. They’re using technology. They’re really leaning into sales, marketing, social media, being really smart with how they spend their money. And thank goodness there’s all these great technology tools and AI because they are rapid adopters of AI and are using that across their businesses. They’re using it in their business operations to compete, run efficiently, innovate. And so it continues to be a good news story. I think once, if some of the challenges go away, I mean, it would be extraordinary in terms of their growth because they do have some access to capital constraint issues and some traditional type of issues, costs, healthcare, labor costs, but they’re doing great. And more people want to start businesses than ever before, Jeff. So that’s also good news. Jeffrey Snyder, Broadcast Retirement Network Well, they are the lifeblood of the American economy. I’ve always said that. I know I’m not the first to say that. So I appreciate, as a small business owner, I can appreciate all the work out there. And I hope that everyone does well going into the end of the year. So you brought up healthcare and that’s really why we had reached out to you. As I mentioned in our virtual green room, we’ve been talking about healthcare for quite some time. I just got my Affordable Care Act renewal. It’s went up 16%. And I can’t imagine that I am in the minority. I think I’m in the majority. It’s difficult for small business owners and their employees to get healthcare. Or costly, I should say. Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council Yeah, it is. I mean, you know, Jeff, we’ve been dealing with this same story and small business owners have for many years, right? I mean, their costs continue to go up and their choices continue to go down. And it is very challenging when you’re trying to compete for employees, grow your business, insure yourself. And for those people who want to start businesses, I mean, sort of de-linking from maybe an employer who provides you with coverage. I mean, you’re a little hesitant, right? Because you’re seeing how much that costs on the marketplace. So it has become a challenge and that’s why we’ve, you know, continue, you know, on Capitol Hill as an advocacy organization to push for more affordable choices for business owners, more innovation in the system, more flexibility in the system so that business owners and entrepreneurs and their employees have more choices and affordable choices. Jeffrey Snyder, Broadcast Retirement Network So with that in mind, I want to ask you about the choice accounts, but let’s back up a little bit. I’m very familiar with health savings accounts. The audience may not be, but can you, I don’t want to put you on the spot, but can you educate us all about what our choice accounts and how they may be different than the traditional coverage that many Americans are getting through their employer or maybe through the exchange? Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council Well, you are, or most, you know, people or even business owners, you know, are not alone in terms of, you know, just beginning to learn about what these choice arrangements are. I mean, during the first Trump administration, choice arrangements hit the marketplace out of a regulation, you know, that the Trump administration had put into place. So there’s still a creature of a regulation and not in law from a statute perspective, but that’s another story. But what we found over the years is that once they came on the marketplace, they were originally known as ICHRAs. Only Washington DC could come up with these acronyms, Jeff. Jeffrey Snyder, Broadcast Retirement Network It’s crazy. It’s crazy. Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council So from ICHRA to choice. So choice arrangements was a rebranding of ICHRA arrangements in September, 2026. Still the same products, still the same tax advantages, still the same sort of policy surrounding them. And essentially rather than traditional insurance, an employer will set up a choice arrangement. They’ll establish a defined contribution amount or a defined amount that they will reimburse their employees. They establish the arrangement and then they allow their employees to go into the individual marketplace and define the health insurance coverage that best meets their needs. And then they reimburse them for that amount. So it is quite simple, you know, particularly if you are working with third-party administrator and a broker who can help you sort of get the rules down and also from an administrative perspective, you know, help allow you to make these transactions on a more efficient basis. But what we’re finding, Jeff, is that these are growing in popularity. You know, the more small business owners or midsize or even larger employees learn about choice accounts, the more appealing that they’re becoming, the market is growing. I mean, 20,000 employers now offer these. 70% of small business owners who have adopted them did not offer health coverage before. So this is truly an option and a pathway for them to provide health coverage for their employees. And we have a minimum of 500,000 people covered, you know, through these arrangements. So the flexibility, the opportunity for business owners to sort of pick the amount, to control that budget, to not get hit by spikes, you know, in premiums that you’ve been getting hit with and just allowing the employee, you know, to have the choice. And then of course there are the tax advantages as well. Jeffrey Snyder, Broadcast Retirement Network So you mentioned the broker, the TPA or the third party administrator. How do, if I’m watching this and I’m a small business owner, how do I set something like this up? You know, where do the, if you don’t mind, I mean, you don’t have to give me like the detailed one through 20, but I mean, is it just reaching out to your advisor to start the process or is there another way to do that? Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council Yeah, I mean, that’s a very good question. I mean, there are, you know, insurance brokers who could help you with this, but there are also, you know, online third-party administrators as well. You know, companies like Thatch or Oscar, but if people go right to, you know, the sba.gov website or to healthinhumanserviceshealthcare.gov, they have a really good sort of how-to online package of how to set these up and also third-party administrators as well. So, you know, both the SBA as well as HHS, healthcare.gov are a great portal to learn about these, the rules surrounding them and also, you know, who these third-party administrators are if you’re not getting the information that you want from your insurance broker or your healthcare broker. So that is what I would recommend just to begin to learn about them. You know, on our website, sbecouncil.org, we did a article on choice arrangements and the links can be found, you know, through that as well. Jeffrey Snyder, Broadcast Retirement Network Yeah, yeah. And that’s how we connect it. And it’s a really good piece. Let me ask you about, so if you’re a small business owner, you set this up, how much of your time or maybe your third-party administrator’s time needs to be spent on education? I would imagine there’s a bit of a difference in terms of enrollment, getting people signed up, right? They’ve got to, I think you made the point and I want to make sure I’m not incorrectly representing what you said, but people can set up the insurance they want based on the allocation they get under the choice structure or strata. So how much education is needed so that the employee understands maybe some of the nuances that are different in terms of this type of arrangement versus what they may be used to, which is going through the ACA portal, you know, or getting traditional healthcare? Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council Yeah, it may sound a little daunting or complex at first, right? If you’re making this change or even if you’re newly adopting, you know, this type of coverage, but what we’re finding through, you know, the actual what’s happening in the marketplace is that the employees themselves love having this control, having the choice of their plan. And so the good news is, is that from an administrative perspective, it takes a lot of the burden off the employer, right? If you’re a small business employer, this is a lot of time, this is a lot of work, these are costs, a lot of headaches involved with administrating these plans. So the third party administrators really are very helpful. And from the employee perspective, I have to say with, you know, technology and the individual marketplace and with AI, there is so, and with the employer themselves, I mean, there are so many resources that you could go to to select the type of plan that you want based upon the allocation that you’re getting from your employer, what your family needs and what you can afford. So, you know, again, with, I think with, you know, technology support from the third party administrator, you know, it is a lot more simple, you know, than it sounds if, and that’s one of the criticisms, oh, you’re putting too much burden on the employee, but actually, you know, it’s something that we’re finding that the employees really like having that control and that ownership, you know, over that plan themselves. Jeffrey Snyder, Broadcast Retirement Network Well, and it should follow up on that. I mean, so much of what I’ve learned in the retirement industry, I think applies to these other areas, especially like healthcare. Personalization is what everyone is looking for. Just like you like to watch certain shows, maybe you’re significant other likes to watch different shows, you have the ability to personalize on Netflix or one of the, the same thing applies for benefits. You can find the benefits that suit you. You’re not in a pool with other employees and everyone’s got to get the same thing, right? That’s, it’s about control, which is where our society is kind of going, where we should have more control over our day-to-day lives. Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council That’s absolutely correct. And if you look, you know, a small business owner might have younger, older people working for them, families working for them, and they all need different types of coverage, right? Based on, on their needs. So that’s why, you know, choice arrangements, and we’re glad they went from ICHRAs to choice. Jeffrey Snyder, Broadcast Retirement Network Yeah, I like the ICHRA better. Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council Because it really did capture, you know, what these plans are all about, you know, provides the individual employee with that choice. And I, and that’s why, you know, they’re, the traction in the marketplace is growing quite rapidly. And from our perspective, why, you know, we’re really pushing to codify these into law because that gives the arrangements more certainty from a law perspective where they’re really, we think, you know, they’ll take off like a rocket, you know, like a rocket ship, you know, in the marketplace once they have that type of certainty. Jeffrey Snyder, Broadcast Retirement Network And, and let me just ask about that. And our show is not a politically driven show. So, but, but what’s the likelihood we’ve got an election coming up in the, in the next week? I don’t want to get into, but things will certainly kind of become different. We’ll have a new Congress. We’ll have the same president, but we may have a different Senate complex complexion. What’s the likelihood that something like this gets taken up either as part of its standalone bill or a reconciliation bill or some other omnibus type of bill? Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council Well, we’re working as a group to, you know, find a vehicle, you know, once Congress gets back, whether it’s reconciliation or some type of vehicle, you know, to make some very simple changes. I think codification would be a key change, maybe getting some tax credits for small businesses. There was a bill that passed the House that it’s now on the Senate side that would make some of the changes as part of a bigger healthcare package that was passed by the House. You know, the good news is, you know, there are some criticisms up on the Hill. I think it’s mostly a misunderstanding of what these arrangements are. But at the state level, we are seeing big bipartisan support for pushing through policies that provide more tax credits, provide more support, you know, for choice arrangements at the state level. So, and also that we’ve got a constituency now, you know, of choice arrangements, 20,000 employers. And we saw very similar things. Jeff, I’ve been up on the Hill for quite a long time in Washington with health savings accounts. And when they were MSAs as a pilot project, they were very restrictive, they weren’t codified into law, but we built a constituency and that constituency helped us push for change. So that is what I think will eventually happen. We have some work to do in terms of pushing back on some of the misconceptions and myths, but they are a solution in the marketplace that’s working. And I think, you know, policymakers understand they wanna do things that will strengthen them and make them better. Jeffrey Snyder, Broadcast Retirement Network Yeah, there’s certainly a lot. I always respect the policymakers and their staff because they have to do so much. They have to educate themselves and be aware of so many things. That’s where people like you, you know, come in. Karen, we’re gonna have to leave it there, not because it’s not a great topic, but because we’re out of time. Thanks so much for joining us. And we look forward to having you back on the program again very soon. Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council Thank you, Jeff. I’d be more than happy to join you again.
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