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How is health care impacting small businesses today?

In the wake of the State of the Union address, health-care reform requires close monitoring. How are the impending health-care changes going to impact small businesses and their employees?

For the past several years, businesses have been recoiling from the increases in premiums with each plan renewal. Faced with each year’s often double-digit percentage increase, employers first must choose whether to stay with their current health-care provider or if it’s worthwhile to shop plans. Shopping requires a company-wide collection of comprehensive health questionnaires to solicit competitive carrier quotes. This is a crapshoot. No one knows what these questionnaires will reveal. Competing providers review the questionnaires and may determine that the current employee population is too expensive to insure. This could result in higher priced competing bids, or few to no competing bids thus leaving the employer with only the current provider and their large increase with no leverage to negotiate the premium.

Many companies have been forced to change from fully-insured plans to new plan structures that may include large deductibles for employers as well as employees. Some companies have implemented Health Savings Accounts (HSA) as they strive to assist employees with being prepared for their portion of high deductibles. HSA’s are administered, at a cost, by employers. The employers process pre-approved employee withholding amounts through their payroll systems into tax deferred savings accounts. Employees can draw from their HSAs as needed throughout the year. These accounts are regulated by the IRS and have to meet certain limit criteria. The shopping list of healthcare products and services continues to grow and become increasing comprehensive and difficult to understand. Human Resource professionals struggle to inform their employees with the changes each year. Health care as an employee benefit is no doubt a significant compensatory benefit (or lack thereof) to their employee base and has become a significant business expense in every way.

So it’s bad now. Changes are in the making. Businesses and their employees are watching and waiting for new policy and hoping for the best. Companies must review their compensation packages so they are competitive if they wish to recruit and retain good employees. Health-care benefits have become a focal point of these compensation packages.

Health insurance reform topics presented by President Obama included pre-existing coverages, preventative care incentives, prescription drugs, and government subsidies. We currently have some government subsidies in place, but these are prepaid by employers and reimbursed with quarterly 941 payroll tax reports. The President asks for ideas on health-care reform as he continues to propose and review the reform efforts. 2010 will bring much change in the health-care industry. Perhaps businesses will soon be able to prepare budgets with informed health-care expense projections. Maybe this year, companies will be finally able to fully understand their best options and deliver health-care benefits to their employees with confidence and pride instead of apologies and offsets.


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