Insuring Your Employees Without Losing Your Shirt, or Theirs

If you own or manage a small or medium size business, maintaining or even obtaining health insurance for your employees is one of your leading concerns, just as it is for your employees. According to a brochure put out by the Georgia Small Business Development Center, employees overwhelmingly consider health insurance to be the most important fringe benefit a business offers them.

Kaiser’s Health Tracking poll for June 2013 found that more than 70% of young adults aged 18 to 30 surveyed said that health insurance was very important to them and worth the price. Of uninsured Americans, “obtaining insurance” was very important to them. Cost was the biggest barrier to obtaining it, either on their own or from their employers. And with reason: the national average cost of employer-sponsored health insurance for an individual is $468 a month and $1,312 for a family of four.

Most small and medium size employers must look their employees in the eye and answer to their communities. As human beings, we want to do right by others even as we know it is also in our best interests. According to the Department of Labor, recruiting and employee turnover account for about 30% of small businesses their salary expenses.

America is one of the few developed countries that link health insurance and health care to employment. Until this changes here are some tips to help you save money when purchasing health insurance for your employees.

  • Go to and navigate to the Insurance Marketplace. This marketplace is meant to allow individuals and small businesses to compare health care plans, ask questions and learn about eligibility for tax credits on insurance and health care plans. Open enrollment will begin in October for January 2014.
  • If you employ up to 25 employees, you’re probably eligible for a tax credit of 35% to offset the costs of insurance. Links to further information are here.
  • Go to your state’s insurance commissioner’s website for similar information tailored to your state.
  • Your state may have a plan to subsidize or reduce the cost of employee health insurance.
  • If you can join a cooperative in your state or city, do so. Cooperative associations allow businesses to negotiate more favorable rates for purchase health insurance by creating a larger pool of insured, lowering the insurers’ risk and lowering premiums.
  • Ask if your professional or trade association allows you to purchase coverage through it for you and your employees. Your local Chamber of Commerce may offer such a service to their active members as well.
  • Talk to your employees and find out their needs. If the fit is right, consider a non-traditional arrangement, such as high-deductible insurance plans combined with Flexible Spending Accounts, Health Savings Accounts or Health Reimbursement Accounts. These plans allow you and your employees to contribute pre-tax dollars and may accumulate from year to year.
  • Find an honest insurance broker who cares about finding the best plan for her/his clients. One excellent way to do this is ask business people you know: word-of-mouth referrals from people you trust are advertising money can’t buy.
  • Contact your state insurance commissioner to check for sustained complaints, both about your broker or about whatever insurers and plan(s) you are considering.
  • Any company that you decide to purchase a plan from must be licensed in your state. In addition to your state insurance commissioner, an excellent resource for consumer information about health plans is the National Association of Insurance Commissioners.

You may also choose to self-insure your employees but you should do this without having a risk analysis and a cash-flow analysis performed. Even if both analyses indicate that self-insurance is prudent, you should buy a stop-loss plan that limits your loss if claims—whether by an individual or in the aggregate—exceed a pre-determined limit. The Self-Insurance Institute of America is a good place to begin your research.

The larger solution is to become politically active and work towards the health care solution you believe in, be it single-payer health care, fee-for-service, or something in between. “Becoming politically active” however, does not mean engaging in the vitriol, ignorance, cruelty and vulgarity that has so contaminated America’s political discourse and dead locked the political process. Rather, it means reasoning as a citizen with other citizens: speaking to each other in civilized, dignified, rational language about the country we share, the lives we want to lead and how we wish to live together.

What is Small Business Insurance and Why Do You Need It?

Many small business owners may be apathetic when it comes to business insurance- seeing it as an expense to avoid or to minimize where possible. But savvy business owners realize that business insurance is in essence an investment on the future. The various business insurance products available protect not only the owner(s) of the business, but also secure all of the business’ working relationships including customers, creditors, and investors. With proper coverage, business owners avoid having to pay for all sorts of liabilities, from flood damage to litigious customers.


There are several different types of insurance available to business owners- each one serving its own purpose. Here is a brief rundown of the major options:

  • Property Insurance. Purchasing business property insurance is the first step toward security. Even if you rent office space instead of owning your building, property insurance is crucial. It will protect your assets from loss in case of a natural disaster, fire, or electrical surge. You can cover every item in your office, including equipment, carpeting and lighting fixtures. While not typically included, you can adjust your policy to cover theft and embezzlement. Business property insurance also pays for loss of income while the business recovers from damage.


  • Liability Insurance. Liability insurance will protect you if someone sues your business for negligence. It should cover personal injury and medical expenses caused by your business. This includes injuries that happened on your premises, and injuries caused by your products.


  • Worker’s Compensation Insurance. Most states require businesses to purchase worker’s compensation insurance, which covers employees who are hurt on the job. Business owners benefit, because this insurance guarantees that workers cannot sue their employers for on-the-job injuries. Instead, they will receive regular monthly payments from the insurer.


  • Commercial Auto Insurance. If your business uses vehicles, you need commercial auto insurance. Personal auto insurance will not cover company cars. This insurance covers damage to the cars, and damage that the cars might cause to others.


  • Health Insurance. Business owners looking to retain loyal workers can offer a health insurance benefits package to their employees.


  • Life and Disability Insurance. Life and disability insurance protects the business in the case of the death or disability of vital employee. When properly executed, the proceeds and stipulations of the policy can create a smooth transfer of ownership or company interests among the surviving business partners and relatives.


It goes without saying that business owners should seek a good insurance agent who will listen to their individual needs and explain the policy clearly. The monthly insurance premiums will be money well spent.

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Health Care Reform: A Major Concern for Small Businesses

Over the past few weeks the Obama Administration has placed the topic of health care reform front and center on the national agenda. The move has sparked fresh debate, concern, and anxiety among politicians, consumers, business owners big and small, as well as health industry experts and representatives.

Most agree that something must be done to change a system where approximately 45 million people across the US are uninsured and that oversight should be extended to regulate a health insurance industry accused of using deliberate and questionable tactics to maximize profits, such as raising premiums, co-pays and deductibles, refusing coverage or charging exorbitant rates to people with pre-existing conditions, and even retroactively denying coverage to people with established policies.

But exactly what will be done in the end is still very much up in the air, and this has been a subject of much concern among small business owners in particular.

It is estimated that about half of those who are uninsured are people who are either self-employed or who work for small businesses. While most big companies still provide health benefits, an astronomical rise in insurance premiums over the last decade has help to create a situation where many small businesses can no longer afford to cover their employees.

There are really three key issues in health care reform of particular concern to small businesses, namely: employer mandates, the creation of a government-run, public insurance plan, and changes to the tax code.

With employer mandates the government would require businesses to either provide health insurance to their employees or pay a fee to the federal government. This may be too much of a financial burden for very small businesses- especially in the present economy. The establishment of a public health plan could provide much needed competition to private insurers and reduce the cost of health insurance. But some fear that this will drive private insurers out of business. Finally, various changes to the tax code have been proposed, of mention are several tax increases, such as taxing some employer-provided coverage, and small business tax credits to help offset the costs of providing insurance.

Whatever the actual outcome of the health care reform bill, the relationship and involvement of small businesses to health benefits is likely to change… for better or for worse.

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An Obama Presidency = A Headache for Small Businesses?

[image source: Anthony Baker]

With a sputtering economy and an uncertain future, issues such as tax reform, health insurance, and worker’s benefits are weighing heavy on the minds of entrepreneurs and small business owners. For many, how the candidates for the US Presidency stand on these issues alone can be the deciding factor come voting day.

So who is the favored among small business owners?

Though both Obama and McCain have been pledging their support to established and up-and-coming small businesses, a close look at their policies reveals sharp differences in strategy and mindset.

If elected, Obama pledges to eliminate the capital gains taxes on start-up and small businesses as well as offer a $500 credit to self-employed small-business owners to offset the self-employment tax. He also plans on freezing the dreaded estate tax rate at 45% .

To encourage entrepreneurship, Obama wants to further develop a network of business incubators in communities throughout the nation with an emphasis on disadvantaged neighborhoods.

Many of Obama’s policies are actually more focused on the workers themselves. He plans on raising the national minimum wage from $6.55 to $9.50 an hour and requiring all employers to automatically enroll workers in 401(k)s or IRAs. Obama would further require all employers to either offer a health plan, contribute money to a worker ‘s health costs, or pay a percentage of payroll to a national public program. Obama also supports the right of workers to bargain collectively and strike without fear of losing their jobs.

While many of Obama’s policies may be good for the average worker, it puts an added strain on businesses that are already seeing their bottom lines erode as the price of commodities and healthcare continues to skyrocket and the financial markets limp along. Such a strategy can make it harder for small businesses to hire and hold on to talent.

On the other hand, McCain’s platform appears more friendly to small businesses.

He plans on granting small businesses an immediate deduction on the cost of new equipment and technology purchases. He also wants to establish a permanent tax credit equal to 10% of the wages spent on R&D. Further tax reforms include: Reducing the corporate income tax rate to 25% from 35%; cutting the estate tax rate to 15% and increasing the exemption to $5 million.

In the area of healthcare, McCain pledges to make healthcare coverage less employer-centric by issuing tax credits allowing individuals to purchase personal, portable health insurance that will stay with the person even with a change in job.

McCain also supports a ban on Internet taxes as well as any new cell phone taxes.

According to a recent survey conducted by Suffulk University, many small business owners feel that McCain will better suit their interests.

Who will you be voting for in November?