Health Care for Small Businesses at Sam’s Club?

There are times, when I come across items that piques my interest simply because they sound implausible. Small business owners, in the United States, are getting ready to comply with new health care rules. One of these requires employers to offer health insurance to their employees. So where does Sam’s Club enter this picture? Employers will over this as a health care option.

What?

Sam’s Club is a whole sale retailer and a division of Wal-Mart Stores (WMT: NYSE). This week they announced new services for small business owners including a health care exchange. This will be offered in partnership with Aetna Health Care, (AET: NYSE). This is not without recent precedent, as another wholesaler, Costco (COST: NASDAQ) came out with their own private health insurance last year.

The difference here, is that Sam’s Club caters to entrepreneurs. The idea is rather simple. Small business owners who are familiar with discount chain will then turn to Sam’s to provide their health insurance to their employees. They are hoping they do this rather than turning to the state exchanges being set up under the Affordable Health Care Act.

This program is available in 18 states and Sam’s Club members with 2 or more employees will be eligible for access to tools and resources offered by Aetna. Employers can then offer their employees a contribution plan that gives them a flat, pre-tax, contribution towards any plan they employee chooses to accept.

U.S. President Obama’s, much maligned, Affordable Health Care Act starts this year for business that have 100 or more fulltime employees. Those with 50 to 99 employees in 2016. A business that does not comply faces a $2,000 per employee fine.

Sam’s, claims that 70 percent of its customers are business memberships that have 5 or less employees. This makes it a core part of their business and worth the gamble that that they will chose something they are familiar with over individual state insurance brokers offered under the Small Business Health Options Program (SHOP). This program has received very mixed reviews as has the entire Affordable Health Care Act.

Sam’s reports that they have 644 stores that cater to 600,000 small business in 18 states. They hope the health care option will simplify their health care options for employees which is becoming mandatory.

Will companies flock to Sam’s for their health care needs? This will depend on the plans being offered by Aetna. Still, this is a good business move on the part of Sam’s. In many cases small business owners are frustrated and turned off by SHOP. If Sam’s can be more transparent and easier to navigate, then they will be successful. Aetna has more than one plan type, with various cost levels which give the employer and the employee something to choose from. This could be a brilliant move if they get it right.