Business health insurance is a major cost of doing business, especially for small companies and mom-and-pop firms. With premiums soaring, many small business owners are asking their employees to shoulder more of the financial burden or cutting benefits entirely.
The New York-based Commonwealth Fund, an advocacy group for health care reform, says small business health insurance costs average 18 percent more than those of larger businesses. In California, health insurance costs increased 10 percent in 2006 alone, according to the California Employer Health Benefits Survey.
Those costs have proven too high for many small businesses. According to the U.S. Chamber of Commerce, more than 45 million Americans are uninsured, and approximately 60 percent of the uninsured are employed by small businesses.
In 2006, the average monthly cost for health insurance for small group plans, which are largely used by small businesses, was $311 per month, according to a survey by America's Health Insurance Plans, a trade group representing health insurance companies. The average premium for a family of four was $814 per month, the association reported.
Small business health insurance may take a huge chunk out of your revenue, but benefits often attract better employees and help retain existing workers. Satisfied, healthy employees are more likely to help your business grow. If you're struggling to provide health insurance, here are some tips that could reduce your small business health insurance costs.
1. Keep employees healthy. Motorola Inc., for example, has instituted a comprehensive wellness program that includes disease management for afflictions such as asthma and diabetes, as well as offering flu shots, cancer screenings, smoking-cessation sessions and a round-the-clock phone line staffed by nurses. The company found that for every dollar it invested, it saved $3.93, according to a 2003 report by the U.S. Department of Health and Human Services report, “Prevention Makes Common Cents.” Likewise, heavy machinery manufacturer Caterpillar estimates that its wellness program will save the company $700 million by 2015.
Such wellness programs don’t just keep company accountants happy. They’re also popular with workers. Pharmaceutical giant Pfizer Inc. found that 85 percent of its employees in its New York offices participated in at least one wellness program, and that 80 percent used on-site facilities such as fitness centers or physical therapy, according to the HHS report.
2. Reduce coverage. Cutting coverage or asking your employees to contribute more to the plan is a logical step to reducing small business health insurance costs. The downside of this strategy is that it will likely prove unpopular with workers.
It's fairly common for businesses to exclude dental and vision insurance, but talk to your employees to see what they want covered. They might opt for having dental and vision insurance and a health savings account, for example.