Small-Business Owners Struggle With Health Insurance Issues

Jul. 29–Wichita real estate agent Myrna Haas already had health insurance, but when the Wichita Independent Business Association began offering a new plan earlier this year, she switched to save money.

Small-business owners list health insurance as one of their main concerns. In some cases, insurance is so expensive they can’t afford it.

“My premium was so high before,” said Haas, an independent real estate agent.

WIBA in June began offering two insurance plans featuring health savings accounts to its members.

The nonprofit group joined with Intrust Bank and Preferred Health Systems to offer the plans, which couple a pre-tax savings account with high-deductible health insurance.

Haas liked the concept because of the tax benefits.

The plan she chose has a $2,500 deductible, which is high but will save her money on premiums. WIBA’s other plan has a $4,000 deductible.

She previously had a plan with a $500 deductible that cost about $670 a month. Her new plan’s premium is $479 a month, and she’s putting $200 a month into the savings account.

“It’s a win-win situation, it seems like to me,” she said.

Haas said she has recommended the plan to other people because “small-business insurance is hard to come by.”

More than 900 of WIBA’s 1,300 member companies participate in an insurance plan the group sponsors. The group also sponsors dental, vision, prescription and long-term-care plans.

Cliff Sones, president of WIBA, said this week that fewer people have signed up for the health-savings-account plans than the group had hoped. About 75 to 80 people have taken advantage of them, he said.

“The one trend that we have found is that of the numbers we’ve signed up, it’s become clear that it’s flowing toward the very-small-business person, more so with the sole proprietors,” Sones said.

“Those companies with multiple employees are shying away. They’re not sure about a health savings account where they have to pick up a big part of the deductible.”

But Sones said small- business owners with just one or two employees seem interested, especially because of the pre-tax element of the plan.

And he said that the good news is about half of those enrolled were previously without insurance.

“We’re trying to get some of those people covered who weren’t covered before,” Sones said.

WIBA has six health insurance plans: two HMOs, two PPOs and the two plans that include health savings accounts.

The health-savings- account plans use “age banding” to determine premium rates. That means prices are linked to age with the theory that the older you get, the more likely you are to use benefits.

Unlike flexible spending accounts, which require users to spend all contributions by a specific date, health savings accounts allow consumers to roll over unused funds from year to year without penalty. Money in the health savings account is pre-tax, meaning it is deducted from the user’s paycheck before withholding taxes are figured, potentially lowering the user’s tax liability. Money in the account must be used for approved health care costs. If the account holder withdraws funds for another purpose, that amount is subject to taxes and withdrawal penalties.

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