Filed under: Small Business Benefits | Tags: activist, benefits, election, healthcare, lobbyist, NFIB, small business
The small business owner and the average benefits specialist already know that the increasing costs of health insurance are crippling small business. The National Federation of Independent Business, a non-profit organization serving as a political advocate for small businesses in all 50 states and in Washington D.C., surveys its members annually to gauge concerns. For the 20th consecutive year, health insurance costs have ranked #1.
According to NFIB, health insurance costs have increased 129% for small businesses since 2000. Employees of Small Businesses pay on average 18% more for the same coverage as employees of large companies. On the surface, this makes sense if you understand risk and actuarial processes. However, small business represents nearly half of the private GDP and small business employs nearly half of the private sector employees in this country.
So, if half of working Americans work for small business, how is it that small businesses pose a higher risk to insurance companies than large companies? I am not a statistician, but it seems to me that insurance companies charge employees of small business more simply because they can. Is it no wonder that as recently as 2005, the CEO of United Healthcare (the largest health insurer in the US) was the third highest paid executive on the Forbes list?
The system is broken. I am all for democracy and capitalism, but when one principal suffers in favor of another it is time to look into changing the status quo. Thus begins the cycle of prohibiting the small business owner from fully realizing the opportunity for capitalism that this country had promised from day one.
What is the answer? No election will solve the problems. No amount of blogging will solve the problems. If you are a small business owner, you must get involved. Start by visiting NFIB.com. Learn what the issues are and how your congressman views them. Talk to other business owners. You do not have to be a lobbyist or run for office. But it is easy to add your voice to the millions of other individual voices so that they can be heard as one where it matters most.
If you do not know where to start, email me.
Filed under: Thoughts of a Benefits Guy | Tags: employee benefits, group health, insurance, small business
Small business owners face an increasingly challenging task
in offering employee benefits. Employees want, if not
expect, various benefits, including group health insurance,
dental, disability, etc. The cost of providing these types
of plans can often be prohibitive to a small business
simply trying to make a profit. The cookie-cutter options
do not work.
But there is hope, but it requires creativity and knowledge.
First, the employer must gauge both the company’s and the
employee’s budgetary tolerance for benefits. Depending
upon the budget available, there are three viable options:
group major medical, partially self-funded medical, or
limited benefits health insurance. Each solution offers
varying requirements of the employer and can be selected
on such a basis.
Once the top priority of health insurance is addressed,
there are other specific strategies that can be integrated
so as to reduce costs and exposure for all involved. A high
deductible ($2500 or higher) can be combined with a Health
Reimbursement Account, or HRA, (controlled and funded by
the employer).
If the HRA is not feasible, the high deductible plan can
be offered alongside a voluntary supplemental medical
plan. The offering of various voluntary benefit options
have a dual value to employers: some types of options can
reduce payroll taxes and the various plans are voluntary
to the employee so they can choose to participate in the
options that suit their individual needs.
Unfortunately, many employers try to predict what their
employees want or need without truly knowing.
Statistically, over 50% of employees will participate in
well-communicated and enrolled voluntary benefit plan
regardless of income or industry. By offering a full
suite of voluntary benefits, an employer can go a long
way toward satisfying their employee’s desire for benefits
without any cost to the company.
Finally, a small business must utilize every advantage
available for offering qualified benefits through a
Premium Only Plan (POP) or cafeteria plan. Many
employers simple assume that they do not qualify or
that the administration is too difficult to guarantee
compliance. Contrary to this perception, the process
is perhaps the simplest program involving the IRS.
A small business owner should seek a benefits consultant,
insurance broker or independent agent who takes the time
to understand the challenges. An employer should do
just enough research to know which questions to ask.
Despite the challenges, it is still possible to offer
a valuable benefit plan without sacrificing the bottom
line – or the future of the business.
