Finding low-cost insurance tougher for small businesses

Small-business owners find the Health Insurance Portability and Accountability Act to be one of the biggest roadblocks to finding low-cost health insurance for employees, according to local insurance brokers.

HIPAA, which was effective July 1, 1997, protects health insurance coverage for workers and their families when they change or lose their jobs. HIPAA also guarantees small firms with 50 or fewer employees access to health insurance, and generally, no insurer can exclude a worker or family member from employer-sponsored coverage based on health status, according to the Centers for Medicare & Medicaid Services Web site.

Nick Love, owner of Love Insurance and Financial Services, said small-business owners can't be denied coverage, but they can be charged up to 66.6 percent more than they were quoted after the insurance company reviews everyone's health history.

"Even if only one employee has a health problem, the employer can end up paying a higher rate," Love said.

Darren Coffman, owner of Benefits Unlimited Inc., agrees.

"Employers get frustrated because one health impairment in a group of employees can cause the premium to be rated up for the whole group," Coffman said. "But this way, you're not singling out an employee with a health impairment."

Coffman, who helps small business with medical savings plans, dental, life and disability insurance, said health insurance costs also are increasing because of additional treatments.

"There's more utilization of all the services," he said. "In other words, everyone goes to the doctor for everything. There are more high-tech treatments now. For example, people are getting an MRI instead of having a simple X-ray done."

Medical savings accounts

Love said medical savings accounts, which have two components to them, are gaining in popularity for the self-employed.

The first component is the high-deductible plan. While the individual has to meet the deductible, it substantially lowers the premiums.

The other component is the medical savings account, which is tax deductible. The self-employed individual puts money in the account to pay for prescriptions and out-of-pocket medical expenses.

Love, who works with with health insurance plans, IRAs, 401(k)s, and dental and disability insurance, said more people have turned to the medical savings plan since it began in 1998.

"People want anything that will help them lower costs," he said. "This is a good way for them to lower costs and save on taxes."