Deciding On Health Insurance for Your Small Business

Nothing vexes small businesses more than the issue of health-care coverage. But it

Two of the most pronounced trends in U.S. business in the past 10 years have been the rise of entrepreneurial activity and the decline in the availability of affordable health-care coverage. As a startup or small-business owner, you are no doubt well-aware of both trends – painfully so, in one case.

While running your own company has lots of advantages, the need to provide health-care coverage for you and your employees ranks as the biggest downside.

The picture – and there’s no way to pretty this up — is bleak. Medical-insurance premiums overall have continued to soar at double-digit rates every year for more than a decade. Meanwhile, growth in the unfortunate ranks of Americans who are living with no medical coverage has become one of our biggest social-policy crises.

The situation is especially dire for sole proprietors and owners of very small businesses. About 45 percent of those “microbusiness” owners who responded to a recent survey by the National Association for the Self-Employed agreed that it is necessary to offer a health insurance benefit to find and hire qualified people. And more than 80 percent maintained that small businesses don’t have access to the same health-insurance options as large companies.

Also in the survey, about 46 percent said they don’t have access to health-insurance options that fit their startup company’s needs. About 51 percent didn’t offer, or plan to do so, a health-insurance plan through their business for themselves or their employees.

You need to analyze the issue of health insurance for your small business or startup and come to the right decision for you and your new business.

Don’t take health insurance for granted

If you go on your own after leaving corporate employment, what you’re likely to miss most is the reliable, high-quality and typically affordable health-care coverage that was provided by your company. And if you were never blessed with that benefit, starting a business certainly isn’t going to make it any easier for you to get good medical insurance.

For this reason alone, many entrepreneurs start up businesses alone that otherwise would have involved their spouses. For the time being, at least, one member of the couple continues working in Corporate America solely, or in large part, for the health-care benefits, to provide a safety net as the other member gets the new business off the ground.

Think twice – and more – if you’re considering going without health insurance

As you build your business, it’s really not a good option for you – or your employees, if you have any – to go entirely without health insurance.

The whopping cost of medical care means that it’s just not worth the risk. Illnesses and injuries trigger half of all personal bankruptcies in this country. Even a relatively minor accident or illness can cost you thousands out of your own pocket. Health insurance should be an integral part of your financial-protection planning.

At the very least, make sure you’re covered against so-called “catastrophic” expenses, due to a major illness or injury, that otherwise could sink you financially just as you’re in a significant medical battle as well.

Make an all-out effort to get some kind of health insurance policy

Just about every entrepreneur in America can find some type of health-care coverage if they devote significant resources to the search and hang tough through obstacles.

Thorough online research, through your professional and social network or even in your local Yellow Pages, you should turn up a handful of leads, such as insurance agents who specialize in small business, coverage plans sponsored by chambers of commerce and other groups, or last-resort policies offered by state governments.

If you’ve left the corporate world, the federal government requires your former employer to allow you to continue your former group coverage – at your own expense – for up to 18 months. So-called COBRA coverage likely will cost you more as an ex-employee than as an active one, but it’s a great benefit for many Americans.

Expect to pay exorbitant prices for health insurance

You may have to pay outlandish premiums or deductibles – or both – at least for a while. More than 85 percent of those small business owners surveyed by NASE said that their health-insurance premiums had risen in the previous year, with a median increase of 17 percent.

There is no other cost category for small business — including skyrocketing energy prices – that has persisted in climbing so much for so long. Yet, health insurance is the one outlay that entrepreneurs simply must make.

Christopher Cameron is CEO of Main Street Insurance.

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