Having a health-care plan has several advantages for small companies. A viable plan helps you recruit and retain talented workers. At the same time, affordable health-care ensures that your workers are healthy and able to work productively for you when they’re on the clock.
But ever-increasing costs make providing health-care plans problematic for many small businesses. A study conducted by the Henry J. Kaiser Family Foundation and Health Research and Educational Trust found employer-based health-care premiums rose 7.7 percent in 2006. The same study showed small-business health-care premiums rose by 8.8 percent in the same period.
In the past, small businesses have offered health-care plans through preferred provider organizations (PPOs) and health maintenance organizations (HMOs) for their employees. But now there are several health-care alternatives being introduced that may give small companies access to economical and comprehensive plans for their employees.
According to Amanda Austin, chairperson of the National Federation of Independent Businesses’ Small Business Healthcare Coalition, Congress has developed health savings accounts (HSAs) – tax-free savings plans that allow employers and employees to pay for current costs while saving for future medical expenses. HSA funds can be used without penalty for qualified medical expenses, and leftover funds roll over for future expenses.
However, to partake in a HSA, you must have a high deductible health plan (HDHP). The U.S. Department of Treasury claims HDHPs generally cost less than what traditional health-care coverage costs, so the money that is saved on insurance can be put into the HSA. Although, Austin says some might not like meeting a higher deductible since it requires more out-of-pocket expenses.
Another consumer-directed health plan is the health reimbursement arrangement (HRAs). According to NFIB, HRAs are employer-funded accounts that reimburse employees for qualified medical expenses. These are similar to HSAs, as they require an HDHP.
“The main difference between these two accounts is that HSAs are funded by employers and employees, while HRAs are only funded by the employer,” says Austin.
Flexible spending accounts (FSAs) are yet another option, created to allow employees to save pre-tax dollars for later use on co-pays, deductibles and other expenses not covered by their primary health-care plan. According to NFIB, this may be less attractive than HSAs, as the IRS requires FSA owners to forfeit leftover account balances at the end of the year.
Senate Bill 1955, also known as the Health Insurance Marketplace Modernization and Affordability Act of 2006, was defeated late last spring in the Senate, but is still being discussed by Congress. Under the proposal, small businesses would join to purchase health benefits. Many organizations are against the bill, as it would allow health insurance providers to offer plans that do not include state-mandated benefits.
NFIB claims that market-based pooling offers employers greater bargaining power, more coverage options, less administrative costs and reduced inconsistency of yearly premium increases. SBHPs would make insurance more affordable according to NFIB, leading more small firms to provide their employees and their families with healthcare coverage.
But Blue Cross Blue Shield Association argues that association health plans would result in higher premiums, more uninsured people and increased potential for fraud and abuse.
According to Blue Cross Blue Shield’s Web site, the legislation would exempt AHPs from state law and oversight, thus hurting small employers and their workers rather than helping them.
States take the initiative
As the debate rages on numerous states, are dealing with the issue on their own. Missouri State Representative Doug Ervin (R) has introduced a bill that would allow small-business employers in his state to assist their employees in purchasing and owning health plans specific to the employees’ needs. The bill would also give all employees the same federal and state tax advantages for the cost of insurance. Basically, Ervin says it would level the health-care field for small businesses.
Even so, offering health care to workers doesn’t mean they can afford it.
Leslie Levine, an employee at Nassar Landscaping in Salem, New Hampshire, says she has heard of the proposed health-care legislation being discussed in other states.
“We just haven’t been able to have health care here because it is too costly,” Levine says. “It’s hurting landscapers when the plans are so high. Employees will go somewhere else to work.”
How do they stack up?
Choices vary according to company, but most provide plans specifically for small-business owners. Here’s a list of a few companies and what they have to offer:
–Blue Cross Blue Shield (coverage available in all 50 states) – HMOs, indemnity and traditional coverage, POS coverage and PPO coverage. BCBS’ small-business group plans vary by state. For more information, click here.
–Aetna (coverage not available in Hawaii, New Mexico and Vermont) – small-business group plans available for companies with two to 50 employees. Plans vary by state. For more information, click here.
–State Farm (Assurant Health products, not licensed in Massachusetts, New York or Wisconsin) – individual coverage, high deductible health plans, short-term care insurance, long-term care insurance, supplemental insurance and student select coverage. Group plans depend on the number of employees. For more information, click here.
–Cigna (coverage available in all 50 states) – HMOs, PPO coverage and indemnity plans. They also offer Open Access Plus plans that allow members to see any licensed provider they choose, with higher benefits available when care is given by an OAP network provider. For more information, click here.
–UnitedHealthcare – coverage for groups of any size, with group coverage also available to businesses’ with one eligible employee in Colorado, Connecticut, Delaware, Florida, Massachusetts, Mississippi, North Carolina, New Hampshire, Rhode Island, Vermont and Washington. In other states, you must have a minimum of two eligible employees for small-business coverage. For more information, click here.