If you’ve been following the election or the hoopla about the nation’s healthcare crisis at all, you’re probably well aware that some 45 million Americans are currently uninsured. But did you know that a vast majority of them are entrepreneurs or small business owners? In fact, in survey after survey, health insurance coverage ranks at the top of small business owners list of concerns. According to the National Federation of Independent Business, nearly 63 percent of unemployed workers are self-employed or work in small firms. And the NFIB says the reason is simple: health insurance is just too darn expensive for most small businesses.
The NFIB is pushing for legislation that will enable small businesses to lower their insurance premiums by pooling their purchasing power, and working toward having a voice in the various healthcare reform scenarios being put together by policymakers. But let’s face it—all those efforts and all that talk aren’t going to help business owners looking for affordable healthcare insurance in the here and now.
So just what can you do to reduce your astronomical healthcare insurance bills—or find affordable insurance if you haven’t got any now? Here are three moves you make to find affordable healthcare options:
1. Lean on Local Offerings
A lot depends on where you live and work. An increasing number of states now offer opportunities for small business owners to buy into reasonably priced insurance. Your local chamber of commerce, for example, may offer group insurance plans. If a pre-existing condition is pricing you and your employees out of coverage, some states have high-risk pools that provide cut-rate plans for people in those types of situations. Others may offer tax credits that will help you offset your expenditures on health insurance. Some offer all three.
Montana, for example, provides a purchasing pool where small businesses can band together to negotiate and purchase affordable health insurance for their employees. The program, Insure Montana, also offers premium assistance to employees and employers who join the pool and tax credits for businesses that are currently providing health insurance to their employees, but may be in danger of dropping coverage due to the high cost of insurance. Ironically, Insure Montana is funded by tobacco tax revenues.
Additional help could be on the way as more programs try to address the healthcare crisis at the state level. A state bill pending in Tennessee, for example, would establish federal tax credits for small businesses (companies with 25 or fewer employees) that offer health insurance to employees and their dependents of $400 for every employee making less than $40,000 per year.
2. Shop Around
Health insurance rates can vary dramatically, so explore all the available options in your region to ensure you’re getting the best possible deal. If you’re a sole proprietor, web sites like Extendhealth.com can help you compare national and regional plans to decide which will work best for you and your family. Another site, eHealthInsurance.com, offers a similar comparison feature for both individual and small business plans. On both sites, you simply enter your zip code and answer a few questions to see plans and pricing in your area.
3. Consider an HSA
Introduced back in 2004, Health Savings Accounts (HSAs) combine health insurance with a tax-deductible savings account for paying health-care costs. In essence, they couple a very high deductible—and therefore relatively low cost—health insurance plan with a savings plan to cover out-of-pocket healthcare costs. Plan deductibles must be at least $1,000 for individuals and $2,000 for families in order to qualify for an HSA, although they may be much higher.
The HSA component of the plan enables employers to put an amount equal to that deductible into a Health Savings Account each year on a pre-tax basis, which employees can then use for qualifying healthcare expenses, ranging from prescription medication to eyeglasses. Best of all, unlike many “use it or lose it provisions” of other pre-tax savings programs, those contributions can be rolled over from year to year so that any unused portions will be available for medical expenses in the years to come—even in retirement. And in the meantime the money in an HSA can be invested, with the earnings or interest also being tax-free as long as they are only used for qualifying medical expenses.
The caveat? Employees must be treated equally for Health Savings Account purposes. If you make a contribution for one employee, you have to make similar contributions in amount or percentage terms for all qualifying employees. •
Unhealthy Healthcare
As you comparison shop, be wary of deals that seem too good to be true. The healthcare cost crisis has spawned a host of unscrupulous companies that promise “group” insurance plans at prices 20 percent to 40 percent below the going rate. Often, such plans are not backed by enough cash reserves to actually pay the claims made by policyholders—something you won’t discover until your premiums are paid and your doctors’ bills are not. To guard against being taken in by such faux firms, request references from other companies who have been in the plan for a year or more. Be sure to ask the company representative how quickly claims were paid.
Next, check the plan’s affiliation. If the company claims its plan is underwritten by a large firm make sure that it really is by calling the underwriter’s headquarters. Ask your state’s insurance department for its “A.M. Best” rating, which rates companies’ ability to pay claims or check the “claims-paying ability rating,” which is monitored by services like Standard & Poor’s. A company that is too new to be rated is too new for you to count on.
Finally, check with your local Better Business Bureau to see if there are any outstanding complaints against the company. •