receives compensation from some of the companies listed on this page. Advertising Disclosure


With COVID-19 Rising, Small Businesses Expand Health Coverage

Donna Fuscaldo
Donna Fuscaldo

Despite a slowdown in business due to the pandemic, small businesses are stepping up, making sure employees have health insurance.

Prior to the COVID-19 pandemic, Stimola Literary Studio in Edgewater, New Jersey, didn't have to worry about offering its staff of nine employees health insurance. Everyone at the company received coverage through their spouses.

But the pandemic, and the devastation it brought, changed that. Some of the literary agency staff's spouses lost their jobs. Others faced an uncertain employment future. Concerns about the coronavirus and the costs associated with care weighed on everyone.

"One of our team members' husband provided family insurance, and he's in commercial real estate in New York City," Peter Ryan, a literary agent at Stimola, told "Another spouse lost his job at the beginning of the crisis, got another job, and lost that."

There are employees with babies on the way and others whose spouses can't work outside the home because of the coronavirus risk. To alleviate the stress and worry, the small business decided to offer health insurance, agreeing to pick up a portion of the costs.

"We are a small little literary agency, and we're like a family," Ryan said. "We wanted to do what's best for them. We're trying to be as generous as we can, but also trying to balance that against what we can afford to keep the books solid." 

Stimola was adamantly against one thing: a high-deductible health plan. "We really believe employees need to feel calm," Ryan said. "They don't need to worry about a $12,000 deductible if they get sick."

Small businesses step up to offer health coverage

Stimola Literary Studio is among a group of small businesses that are stepping up and providing employees with access to health insurance despite (or because of) the COVID-19 pandemic. Some are doing it out of a sense of obligation to their employees, others because they can afford it.

In a recent poll of small business owners, 18.8% said they plan to expand their healthcare plans. Among those employers, 9.9% are adding supplemental health services, 8.9% are including an employee assistance program, and 6.9% are adding either telehealth services or supplemental substance abuse recovery services.

The time to make those changes is now, with open enrollment either already underway or quickly approaching. This is when many businesses have to decide which health insurance benefits they will offer employees.

A recent Zenefits survey of business owners found comparable results. Of the business owners polled, 31% had started offering health insurance benefits, like telemedicine services, or rewards, such as extra paid time off and online fitness classes, because of the pandemic.

"There's an increase for medical, dental and vision in 2020," said Tracy Cote, chief people officer at Zenefits. "It's a mix of employers doing well and businesses surviving the pandemic, so they are going to increase benefits."

This fall, Zenefits started offering online access to discounted eyeglasses and on-demand medical services, including video calls with doctors and nurses.

Business owners driven to provide peace of mind

Putting employees at ease is what motivated Sid Berry, founder of Houston-based web design firm 71Three, to offer his staff of 11 employees health insurance. Before the pandemic, 71Three employees didn't have health coverage. It wasn't even on Berry's radar, given the company's size. But with sales declining and other businesses in Houston laying off workers since the start of the pandemic, he wanted to give his staff peace of mind.

"It's trying times for everybody," Berry said. "While a lot of the other companies are doing layoffs, it's the best time to build that trust and loyalty."

Berry decided to foot the bill for the coverage, paying about $15,000 per employee. Employees are responsible for copayments and deductibles.

"In the last few years before the pandemic, the company was doing well. A lot of that is going toward health insurance now," Berry said. "Currently, all that cost is coming out of pocket, but the hope is once the markets start opening up, business will increase."

More important than the outlay is the partnership it builds between the staff and the company, Berry noted. "To give somebody health insurance gives them peace of mind. It allows them not to worry."

Stepping up in trying times breeds loyalty

Small business owners aren't only being altruistic. They realize their actions today can have a positive impact tomorrow. Once the virus is contained and the economy recovers, the job market might get tight again, creating new recruiting and retainment headaches. Business owners who took care of their employees during the pandemic could have a better shot of retaining them when business is booming.

"Offering access to affordable health insurance is critical," said David Feinberg, vice president of risk and insurance programs at Justworks. "Smart businesses continue to do everything they can to provide that coverage."

Health insurance almost an obligation

Offering health insurance had always been the plan for Tyler Dahl, owner of Escape Room San Antonio. When the company raised funding in January and February, the business plan was built around providing certain benefits to full-time and part-time employees.

That all imploded when the coronavirus hit. The escape room's opening was pushed back, forcing Dahl and his team to renegotiate a lease and terms with investors who had just backed the startup. Despite a steep reduction in projected revenue, Dahl decided to forge ahead with the plan to offer health insurance to his full-time workers.

"We're not going to put someone else at risk financially with their health," he said. "We're willing to shed a few hundred dollars in our marketing budget to offer that healthcare option to full-time employees."

Just like the other small business owners we interviewed, Dahl believes providing health insurance can be a powerful recruitment and retainment strategy, particularly during the pandemic. Even with more than 12 million people in America unemployed, it's still competitive out there for talent – particularly for small business owners who have to compete against larger companies with deep pockets.

"My general manager is the primary user of it, and I think it's the one contributing factor to why she's here," Dahl said. "It made the difference for her coming over and staying with the company."

Image Credit: Halfpoint / Getty Images
Donna Fuscaldo
Donna Fuscaldo Staff
Donna Fuscaldo is a senior finance writer at and has more than two decades of experience writing about business borrowing, funding, and investing for publications including the Wall Street Journal, Dow Jones Newswires, Bankrate, Investopedia, Motley Fool, and Most recently she was a senior contributor at Forbes covering the intersection of money and technology before joining Donna has carved out a name for herself in the finance and small business markets, writing hundreds of business articles offering advice, insightful analysis, and groundbreaking coverage. Her areas of focus at include business loans, accounting, and retirement benefits.