Health Care Headaches

The cost of providing health insurance for myself, and my three full-time employees, is astronomical. I'm still in shock over the fact that our store's health insurance premiums went up 17 percent this year, on top of a staggering 30 percent increase last year. Should I ask them to pay their own premiums?

A: I wish I had an easy solution to this dilemma. The cost of health insurance is reaching a crisis point for many retailers. In fact, only 29 percent of gift retailers surveyed by Gifts & Dec provided any health insurance, even for managerial staff — and 53 percent of those managers were family members. Full-time sales staff received health insurance from only 16 percent of the respondents. And according to a recent Dun & Bradstreet Small Business Survey, even these numbers are declining due to huge increases in premiums.

The gift industry and small businesses in general are losing out on quality, long-term employees because of the lack of health insurance benefits. As our population and staff members grow older, the need for health care becomes more acute. Teenage employees may be covered by their parents policy, and healthy young employees in their 20s may not think they need insurance, but in order to attract and retain staff members over the age of 30, a store really needs to offer some kind of health insurance coverage.

There are two ways that offering group policy benefits your employees, whether you are paying the premiums or not. The first is that inclusion in a group almost always lowers the premiums for an individual. The second plus is that a group policy spreads risk factors over a larger pool, which means that a person is not likely to be rejected due to a pre-existing condition. This type of protection becomes more important as we age and develop various ongoing health issues.

There are, of course, drawbacks to subscribing to a group health insurance plan, whether it be an HMO (health maintenance organization) or a traditional insurance policy such as Blue Cross/Blue Shield. With a group policy, some health care decisions will be dictated by the insurance provider rather than by a doctor alone. In some instances, an employee who has a long-standing relationship with a primary care physician may not be able to continue with that physician. Certain procedures may not be covered, and hospitalization coverage may be limited. But in most cases, in order to make group health insurance feasible all participating employees must subscribe to the same plan.

This puts a great deal of responsibility on the employer in selecting the type of insurance to provide. You may wish to talk to an insurance broker to see what plans are available. Speak with the membership departments of the HMOs in your area to see what plans they offer for small business. And be sure to look into whether a trade association you belong to, or your local chamber of commerce, has an affordable plan you can join.

In most cases, the larger the pool of participants, the better the deal. If you don't find an existing group, perhaps you can band together with other businesses in your community, or in your field, to form such an association.

There are several features to look for in health insurance. The first is the deductible. How much will you, or your employee, have to pay for each contact with the health care industry? A co-pay on office visits is becoming quite common, but some policies that provide only for major catastrophes don't even kick in until the patient has already paid the first $1,500. These are not ideal, given that preventative care can often help reduce health care needs, but they're better than no insurance at all. Ask your employees what specific coverage is most important to them, and be frank about how much you feel your shop can afford to contribute.

You can ask your employees to pay their own premiums, but most retail employees don't make much money, and wouldn't be able to cover the cost of health insurance unless given a pay raise — which puts you in the same position financially. If you do continue to pay premiums for your employees' health insurance, be sure to let them know the cost of this benefit. Any increase in the payments you make for health insurance premiums should be presented as a raise in the employee's compensation.

Q: The manager of one of our stores quit suddenly in the middle of the Christmas season, and demanded that we continue her on our health insurance policy. Are we required to do this?

A: Yes, you are required to offer her COBRA coverage if your business has more than 20 full- or part-time employees. COBRA (Consolidated Omnibus Budget Reconciliation Act) is a remnant of a large package of federal legislation passed in 1986. It is intended to protect employees from being without health insurance after leaving a job. Under COBRA, most individuals can continue coverage for 18 months.

The employer, however, does not provide the insurance — only the opportunity for employees to buy coverage for themselves and their families through the business' group plan. Employees have 60 days to accept coverage, or they lose all rights to benefits. Once COBRA has been accepted, the former employee pays premiums directly to the insurance company. For more information, see http://www.cobrahealth.com.