03/ 29/ 2006
by Lena Basha
Joe Wilson knows the alarming statistics about small-business owners being forced to drop health-care coverage for their employees. He doesn't want to be the latest one. But with double-digit increases for the past four years and absolutely no relief in sight, Wilson, owner of Fredericksburg, Va.-based PermaTreat Pest Control, is quickly realizing that without a solution to the health-insurance crisis facing the country, he-and his employees-could be its next casualties.
In 2002, Wilson saw the first hint of how hard his business would be hit when his premiums rose by 42 percent. The next year, another double-digit increase followed that, fortunately, was more manageable. Wilson hoped the worst was over. But in 2004-and again in 2005-hard times returned, and his premiums rose 43 percent. Today, PermaTreat's premium is $400,000--and Wilson can only afford to pay 75 percent of it.
"It's hurting my business in so many ways," Wilson says. "It really affects the bottom line, and raising my prices isn't an option: There's no way we could raise prices high enough or fast enough to offset double-digit increases in our health-insurance premiums."
What's worse, Wilson says, is the pressure it puts on him as an employer. "The higher the premiums go, the more it puts us in the position of not being able to be competitive with larger businesses that offer better benefit packages," he says. "We're all competing for the same skilled employees. I'd like to think that I can continue to provide health benefits well into the future, but I have to admit, it's a real crapshoot."
Wilson is not alone. Small-business owners across the country are living their own health-insurance horror stories-wrought with out-of-control premium increases, time-consuming hunts for cheaper benefits and the constant struggle to make ends meet.
Taking it in stride
Dropping benefits for employees isn't an option for Judy Smith. The owner of Raleigh, N.C.-based Smith Seal, a distributor of sealants and sealant accessories, pays almost $40,000 a year in premiums for the 11 of her 14 employees who are covered. This year, her costs rose 14.5 percent. Smith is proud that she continues to offer coverage, but admits it isn't easy.
"I'm one of those people who believes offering health insurance to your employees is a must," she says. "It's their right. I can't bring myself to not insure my people. I'd almost rather go out of business."
Even though her premiums have risen, benefits have decreased. Just a few years ago, Smith's deductible was $200 per employee, a price she was more than happy to pay. Today, her deductible is $5,000, and she no longer can afford to pay the full amount. Employees must cover part of the cost.
"There's no end in sight," she says. "Sometimes I feel like, as small-business owners, we never can catch a break. But we stay the course anyway because we're entrepreneurs. We take care of our people-not fire them when costs get too high."
That attitude, Smith says, is characteristic of large businesses, which end up catching the breaks when it comes to health-insurance costs. Health-insurance carriers view any business in terms of risk. In larger companies, the risk is more spread out, allowing insurance carriers to offer lower premiums. But with small businesses, each employee is evaluated individually.
"We are very vulnerable," PermaTreat's Wilson says. "If we have one catastrophic event, it sinks our ship. If we could be part of a larger pool, then one catastrophic event-or even two or three-wouldn't change the numbers that much."
Smith agrees. Her highly specialized industry demands skilled workers, most of whom are in their 40s or 50s. "If I have someone who is 20 years old, I pay a premium of $70 a month," Smith says. "But if someone is 50 years old, I pay $500 a month. For big companies, it doesn't work like that. They get discounts based on the number of individuals in the group. I can't discriminate based on age as an employer, but insurance companies can? That's not fair."
Searching for a cure
The worst news? No relief is coming any time soon if the logjam over health insurance continues in the U.S. Senate. And if history is any indication, small-business owners can expect premium hikes to continue. Both Wilson and Smith fully expect double-digit premium increases again this year. Yet neither is taking a backseat approach in the fight for affordable health care for small-business owners and their employees. When they're not busy running their businesses, Wilson and Smith (both longtime NFIB members) take the time to talk to their lawmakers, educate their employees about the health- insurance issue, and mobilize other small-business owners to join the fight for more affordable health care.
"It's so important for us to be involved in this issue and get the message across," Wilson says. "It's more than just a human interest issue. Forgive the pun, but it's an issue that impacts the health and welfare of business, too."
The Best Plan
NFIB is closer than ever to helping pass legislation that would offer real savings to small business
So close, yet so far away--that's what is so frustrating to so many small-business owners. For almost a decade, NFIB has been advocating Small-Business Health Plans, a solution that would lower the cost for small businesses by allowing them to join together to purchase health-insurance plans. Being part of larger groups would give small businesses greater bargaining power and lower rates-the same privileges that big businesses enjoy.
NFIB has led the fight for SBHPs from the beginning, attending committee meetings, prepping members for congressional testimonies and building coalitions.
Now, after years of hard work by NFIB and its members, we're closing in on our best chance for victory. The U.S. House has passed legislation that would allow SBHPs. President Bush has repeatedly promised to sign the bill into law. The problem begins and ends with the Senate. It's crucial for NFIB members to act now. Urge your senators to vote in favor of legislation that would lower the cost of health insurance for small business. Learn more about the details of the specific legislation in Congress and find out how to contact your senator at www.NFIB.com/healthcare.
Save Without Skimping on Benefits
NFIB Health Savings Accounts offer options to business owners trying to afford health insurance
Health savings accounts have helped thousands of business owners save on health-care costs since 2004, when President George W. Bush signed them into law.
Sherrie Jenkins, owner of The Supply Room in Nashville, Tenn., is one business owner who enjoys the savings. Since signing up for an HSA in 2004 for herself and four of her nine employees, Jenkins has saved more than 30 percent on health-insurance premiums each year.
What are HSAs? Health savings accounts are tax-free accounts for qualified medical expenses. Any taxpayer with a high-deductible health plan can contribute up to $2,650 a year ($5,250 for families) into an HSA. Because HSAs must be coupled with a high-deductible health insurance plan and because a higher deductible means a lower risk for insurance companies, premiums are, on average, 40 percent lower.
Account holders can use the tax-deferred funds to pay for medical expenses-like doctor's visits, prescription drugs and medical supplies like gauze and bandages-and to reach the deductible, which is usually $2,000 for individuals and $4,000 for families.
How do HSAs work? When Jenkins does go to the doctor or the pharmacy, she uses a debit card linked to her HSA that works just like a regular debit card. For HSA holders like Jenkins, who rarely go to the doctor, there's an added benefit.
"I've got pre-tax dollars in the savings account earning interest," Jenkins says. "Most other savings account use after-tax dollars. If you're going to put away some money, it might as well be in an HSA."
Small Plans, Big Relief
Many businesses are beginning to embrace the latest trend in getting a handle on health-care expenses: mini-medical plans. Mini-medical plans, or voluntary benefits, are a good alternative to fully insuring employees. In addition to having lower costs than traditional health plans, they provide basic coverage for doctor's office visits, lab work, limited surgery and even prescription drugs.
These plans do not provide major medical benefits like traditional plans would and they exclude catastrophic illness and injuries. Even so, when employers have no existing health plan or are faced with controlling costs, limited-benefit health-insurance plans may provide an answer.
Through a partnership with NFIB, American General Life and Accident Insurance Company is offering NFIB members access to a variety of mini-medical plans, including the PlusCare supplemental medical indemnity plan, which provides benefits such as hospital administration, daily room charges, intensive care, surgical and anesthesia, prescription discounts, ambulance and wellness screenings and more. A Skilled Nursing Care Benefit is available exclusively to NFIB members. In addition, Critical Illness and Emergency Treatment Riders can be added.
For more information, visit www.NFIB.com/agla.
Trust NFIB
Save up to 42 percent on your current premiums with an NFIB Health Savings Account and a compatible insurance policy, offered to NFIB members through JLBG Health Assurant Affinity. Learn more at www.NFIB.com/healthsavings.
