Small business healthcare plans
Rising premiums = Tough choices
David Hurley, owner of Landmark Engineering and Surveying in Tampa, had to offer higher deductible coverage with less generous benefits. [Photo: Michael Heape]
Some results of the Kaiser Family Foundation's 2011 survey about employer-sponsored health insurance:
• Average annual premium: $5,429 for employee, up 8% from 2010; $15,073 for family, up 9% from 2010 and 113% from 2001
• Average share paid by employees: 18% for themselves, 28% for family coverage. Workers in small firms on average contribute less for themselves but more for their families (small for Kaiser is up to 199 employees, significantly larger than Florida small businesses)
• 48% of companies with three to nine employees offer health benefits.
• Employers are making a defined contribution toward healthcare insurance and leaving it to employees to pick their plan based on what they want to spend.
• Wellness continues to be an emphasis as do higher payroll deductions for smokers and discussion of higher payroll deductions for those with a high body mass index or high blood pressure. Consulting firm Towers Watson, in a national survey, found a rising number of companies charging employees more for coverage if they smoke, are obese or have high cholesterol.
Florida insurance agents say the premium increases their customers are seeing vary from low single digits to double digits, but a 2011 Kaiser Family Foundation annual national survey found an 8% increase in premiums for employee coverage. In Florida, the size of premium increases has much to do with geography, the age of a small business's workforce and its claims history. "One or two people can make a difference in a small group," says Robert Pariseau, president of benefits company AGIS Tampa Bay. Small businesses generally see their workforce age as they retain core employees through the years, driving up premium costs. Hurley employs 26, down from 89 in 2005, and covers $302 of the per employee monthly premiums of $335 and $373, depending on the plan.
Small businesses have restrained cost increases by adopting high-deductible plans. Nationally, Kaiser reports high-deductible plans covered 23% of small-business employees in 2011. While high-deductible plans can hit employee pockets, it can make them better consumers by, for example, motivating them to ferret out lower-cost providers of services like MRIs. "We're starting to see that have a positive impact," says Julian E. Lago, who heads the employee benefits division at Plastridge Insurance Agency based in Palm Beach Gardens and a former president of the Florida Association of Health Underwriters. Wider use of generics also has helped control costs.
Shifting costs to employees remains a trend, but it can also lead workers to drop coverage, which sets off its own negative loop as insurers don't get the number of employees for which they contracted.