07/ 08/ 2004
by Jeffrey Moses
Small-business owners have been on the front lines of our nation's health-care crisis since it began. For several years, we've been making progress toward passing Small-Business Health Plans, also known as AHPs. This legislation will allow us to join together across state lines, taking advantage of purchasing power that large corporations and labor unions already enjoy when they buy health insurance.
Until AHPs become law, small-business owners have tough choices to face. Health insurance costs have risen dramatically and continue to do so. Sticker shock can dampen the spirit of even the most successful-business owner. Rebecca Morrow, editor of the 2002 Benefits Management and Cost Reduction Survey, published by The Institute of Management and Administration (IOMA), estimates that small-business health care costs have been and will continue to increase at double-digit annual rates. Many companies have experienced rate increases near 20 percent over the past year alone.
Perhaps just as daunting is the seemingly limitless array of insurance types and coverage benefits available. Upon close examination, it’s common to realize that no two plans are quite the same. Options may vary considerably, and each choice comes with a price tag that may not seem consistent with options in other plans.
The best way to navigate choices is to consider the following points when searching for a health care provider.
1. Contact only experienced, reputable health-insurance providers or agents. Ask other small-business owners in your area which provider or agent they use—and ask about their experience with their provider regarding:
- Prices
- Deductibles and co-pays
- User-understandability of options (can you understand them as written in the policy description, or does each option have to be explained in detail)
- Receptivity of agent or provider-representative to answer questions before and after a contract is written
- Cost increases over previous few years
- Cost containment options (such as disease-management programs)
- Speed of claims payments for covered illnesses or accidents
- “Hassle-level” of payments (i.e., do you and your attorney need to threaten action just to get a response)
Note: Some health-insurance plans are administered by well-known companies, while actually being financially backed by lesser-known and potentially less well-heeled companies. Before purchasing, be sure to find out who actually pays claims costs.
2. You may want to contact your state department of insurance for a list of local providers that offer group plans for small businesses. Some states have associations that allow small businesses to receive favorable rates and coverage. Also, NFIB offers a wide and attractive choice of medical, dental and vision plans: Health Savings Accounts, fee-for-savings accounts, PPO plans, medical savings accounts, Section 125 plans, disability insurance and short-term coverage.
3. A straightforward and simple way to assess the overall service of a provider is to contact several doctors’ offices in your area. Ask which providers have been the most and least reliable in overall servicing of claims. The claims administrator of a busy doctor’s office will be intimately familiar with all major providers covering local individuals and businesses.
4. When getting down to the actual purchase, avoid buying on price alone. Take into account the overall policy, not just a few central features.
5. Consider the advantages of cafeteria plans, pre-tax purchase plans, and other customizable types of plans that allow employees to choose their own types and levels of coverage. These can save your company money, while allowing employees to select coverage most appropriate for themselves and their dependents. Purchasing one-size-fits-all coverage will probably end up costing more.
