2009 Small Business Guide
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small business
Finding small business health insurance

Just raise the question, he says. Ask "how does your commission vary with the plans that you work with?" Tyson says.

And, if you're buying group insurance, talk to your agent about pooling opportunities that spread the insurance carrier's risk across a larger number of people – and often lower your cost, Scarborough says.

No matter how you do it, "plan on spending a lot of money," Friedman says. "Insurance is expensive."

Are HSAs still practical?
Several years ago, many insurance industry insiders and business boosters believed health care savings accounts were one big answer to the health insurance cost problem for small businesses.

The idea pairs lower cost catastrophic policies (coverage with a high deductible, designed to cover high-cost health crises) with accounts in which employees (and sometimes employers) save amounts equal to those high deductibles. For many, they were seen as a tool to help small business owners bridge the gap between the desire to protect employees and the need to stay in the black.

But the concept has one major flaw. It only works if someone funds the HSA account. Otherwise, the insured is just left with a high deductible plan.

"A high deductible health plan with an HSA works well if the savings feature is funded," Holland says. "Frequently it is not, however, leaving people with large unreimbursed medical bills.

"To reduce costs, employers are going to high deductible options and not funding the savings account," she says. "And routinely, employees are not doing so." The end result is that too many times, those employees rack up a $5,000 to $10,000 medical bill even with an insurance backstop.

"As much as half of HSAs are not funded or are not funded properly," Leavitt says.

One solution some businesses have found is health reimbursement arrangements, Leavitt says. Business owners buy coverage with a high deductible (say $2,000), then fund a portion of that in the HRA (say $1,500). The result is a lower deductible for employees and a premium that the business can afford.

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