Be an expert shopperAnother way to approach the health insurance conundrum is to work backward. Draw up a budget, then talk with several agents to find out what kind of policies you can afford. Of those plans, which comes the closest to meeting the needs of you and your employees?
But don't make the mistake of looking solely at price, says Pat Halo, a family nurse practitioner and author of "Managing Health Benefits in Small and Mid-Sized Organizations." Instead, she says, ask "what are the better plans and what do they offer?"
When Friedman and her business partner launched their business nine years ago, "a family plan was important and we needed something that had a higher deductible and lower monthly payments because we were just starting out and had to keep costs down," she says.
At the same time, she says, "we were entrepreneurs married to entrepreneurs, so health insurance was a priority for us."
Most small business owners will find a wealth of products on the market. But all of that choice is a double-edged sword, Halo says. Small business owners "have to be expert shoppers," she says.
Unfortunately, for small business owners, keeping up with health plans is an ongoing process. Even with the same plan, coverage can change from year to year. "A health plan is not a static product, but a field in motion," she says.
"You have to really understand the plan you're signing on and really understand the fine print," Friedman says. To control costs, Friedman and her partner reconfigure coverage at least every other year -- sometimes more often. And they've switched carriers once.
But all that constant premium shopping is tedious and takes a toll, and sometimes it can backfire, Halo says. Coverage may be cheaper because certain items, like maintenance drugs for chronic conditions, are not covered, she says.
"You don't want to be penny-wise and pound-foolish," Halo says. It does no good to switch to a cheaper plan if it means employees can't afford the drugs they need to stay healthy, she says.
A not-so-secret agentOne secret weapon for many entrepreneurs is an agent or broker who understands insurance and small business.
"For now, an agent is the preferred way to go," says the business federation's Austin. "There's more of a relationship there," she says. And that's especially important to small businesses without a human resources person.
"Look for a specialist in small business," Laszewski advises. The best way to find one is through a referral from another small business owner.
It's vital to find out exactly how the person is compensated, Tyson says. While some will represent many different carriers, they may be compensated more for some than others. "And agents may push those with commissions," he says.