Maryland Senate advances Better Small Business Employee Benefit Act to improve health insurance access

Maryland's Senate Finance Committee is considering the Better Small Business Employee Benefit Act of 2025, a pivotal piece of legislation aimed at enhancing health insurance options for small businesses. The bill, introduced by Senator Feldman, seeks to allow Professional Employer Organizations (PEOs) to offer large group health insurance plans to small businesses, a move that could significantly reduce costs and administrative burdens for these employers.

Currently, Maryland is one of only three states that restrict PEOs from providing such plans, alongside Maine and Alaska. This limitation has left many small businesses at a competitive disadvantage compared to their counterparts in the other 47 states, where PEOs can offer aggregated health plans. The proposed legislation aims to align Maryland with these states, providing small businesses access to more comprehensive health insurance options.

Supporters of the bill, including representatives from the Maryland Retailers Alliance and small business owners, argue that allowing PEOs to offer large group health plans will not only lower premiums but also enhance the ability of small businesses to attract and retain talent. They emphasize that small businesses often struggle to provide competitive benefits due to high costs and limited bargaining power.

The bill follows a study conducted by the Maryland Insurance Administration, which found inconclusive evidence regarding the potential negative impacts of PEOs on the small group market. Proponents assert that PEOs can coexist with existing small group markets without undermining them, as evidenced by practices in neighboring states like Virginia and Washington, D.C.

However, the bill has faced scrutiny from some stakeholders, including representatives from Blue Cross Blue Shield and the Maryland Health Benefit Exchange, who express concerns about the potential effects on the small group market and the need for transparency in the offerings provided by PEOs. They advocate for amendments that would include sunset provisions to evaluate the bill's impact and ensure that small business owners are fully informed about the benefits they are purchasing.

As the committee deliberates, the outcome of this legislation could reshape the landscape for small businesses in Maryland, potentially providing them with the tools needed to offer competitive health benefits and thrive in a challenging economic environment. The committee is expected to vote on the bill soon, with discussions around amendments and stakeholder concerns continuing to shape the final proposal.