Small Business Health Insurance: How Business Owners are Dealing with Rising Costs

Health insurance is an area of concern for just about all small business owners.  Business owners are facing the rising costs of insuring themselves and their employees.  What the future holds under the Affordable Care Act is uncertain.

Find out what other business owners across the country are doing to keep their health care costs down.

Setup a Health Savings Account

Photo credit: Esther Kiss

“As a small business owner running an S-corp with no full time employees, I had to arrange my health insurance on an individual basis. My CPA referred me to an insurance broker who suggested BlueShield. I have a Health Savings Account (HSA) compatible high deductible plan that fully covers me (dental & vision included) for about $200 / month. The maximum annual deductible is $6,000. I enjoy it because it’s a PPO so I can chose what doctors I go to. An HSA compatible plan also has tax

benefits. In addition to having peace of mind, I also set a good example for my clients by having properly taken care of my health insurance. I typically work with experts and entrepreneurs who run advice-based small businesses themselves. In my industry, clients often ask for input on issues that are not tightly related to getting high end clients (which is why they hire me). Although I can’t give them professional advice per se when the topic of health insurance comes up, I’m able to point them to the right direction because I’ve been through the same situation myself. This adds to their overall experience working with me and it’s a win-win all around.”

– Esther Kiss, The Weekly Kiss

Increase the deductible to offset rising costs

Photo credit: Kim Beeler

“I have operated my home-based business since May 2002. I started with Kaiser Insurance and now I am with Providence Healthcare. As a sole proprietor, it has been tough to keep my individual health care coverage, which doesn’t include a dental plan, because it increases each year. It seemed when I first started getting health coverage, it only increased when I hit a certain age bracket range.

The only year my premiums didn’t increase was last year (I thought it was a mistake. When I called Providence they said it was due to the Obama health care plan changes that required that 80% of profits had to be returned to members). However, this year my insurance was increasing by about $40/month, so I opted to increase my deductible from $2,500 to $5,000, which I believe has a maximum $10,000 out of pocket clause. I feel like I am getting priced out of the health care system when I need it the most. My monthly premium now is $283.”

– Kim Beeler, Beeler Marketing

Obtain coverage through the local chamber of commerce

Photo credit: Richard Frisbie

“I am a sole proprietor business with no employees, I joined the Ulster County Chamber of Commerce (annual dues $325) to be eligible for their group health insurance offered through Liazon Benefits of Buffalo, NY. My Insurance Company is CDPHP (Capital District Physician’s Health Plan.) They charge me $683.45 a month for their premier plan – a copay 1 ($40) HMO plan, and $19.12 for a value Dental plan which pays part of my preventative maintenance and part of other services (I haven’t used it yet, so I’m not sure how much or exactly what else it covers.) There is a $2 fee for a paper invoice. The total I pay is $704.57 monthly There was a choice of several less expensive plans, but at my age (64) I thought better coverage was wiser. Besides – I will be eligible for Medicare before the end of the year.”

– Richard Frisbie, Hope Farm Books

Get help from an independent insurance agent to sort through the mess

Photo credit: Beth Cochran

“I own an independent public relations company, now five-years-old. I do have health insurance now, which includes dental, but I didn’t for the first year. Part of the reason was I didn’t even know where to look for it, which company offered the best, most cost effective plans, or even how much to expect to pay. I ended up going through an independent insurance agent who culled multiple plans and presented them to me. In the four years since I’ve changed providers three times, not by choice. Either the plans I had were dissolving or the provider was merging with a larger company. I’ve had HealthNet for the past two years and pay roughly $220/month. It’s just me. I have a part-time employee, but she has health insurance through her other employer.”

– Beth Cochran, Wired PR

Hire 1099 employees

Photo credit: Frank Ruppen

“I only have 1099 employees and I do not contribute towards their health coverage. But I should add that as a licensed insurance agent, small businesses can pay an exorbitant premium for group coverage, particularly when they are under 10 people. Because these plans are guaranteed issue, meaning no one can be excluded for pre-existing conditions, the premiums are much higher as state laws usually limit the surcharge a carrier can add once the small business goes through underwriting. For instance, I am currently working with a small group here in Florida. As an example, for one male employee aged 55, his premiums are double my individual rates. Further, as the business owner, he will review the quotes which for one carrier ran 100 pages. As I said, this process is frustrating and complex.”

– Frank Ruppen, Forward Associates

Allow employees to obtain their own coverage and reimburse a portion of their costs

Photo credit: Laura Gallagher

“I am a small business owner. Eight employees work at The Creative Company. We were on a group plan (until a few years ago) but I now reimburse 50% on individual plans and 25% on family plans. Part time and full time employees are eligible as long as they cannot get health insurance elsewhere. Employees are able to choose the plan they want to be on from an independent insurance agent although all of us have chosen local provider, Physicians Plus. This cost continues to increase every year but it is something that even a small business can provide for their employees without breaking the bank. It helps us that each family or individual chooses their own plan so if they want less coverage, they decide. If they want more coverage, they choose. We like that its not a “one size fits all” plan.

A recent new hire told me that he was saving $12,000 a year by going on our plan. I personally think that many people don’t know how to buy insurance and may be paying more than they need to.”

– Laura Gallagher, The Creative Company

What have you done to keep your small business health insurance affordable?  Please share your stories below!