What Can be Done to Help Small Business Owners Deal with Rising Health Care Costs?

January 30, 2008

By Beverly Gossage

For small business owners, health insurance has become an expensive benefit to offer. That is the main reason 52 percent of small business owners in Missouri do not offer a group health plan, and those who do, want answers on how to reduce the rising cost of premiums. Fortunately, there are ways that these cash-strapped employers can help their employees acquire affordable health insurance.

One way to lower rates is by switching to consumer-driven health plans, which can reduce monthly premiums by about 35 to 50 percent, depending on the insurance carrier.  By using these health insurance plans, which can be partnered with health savings accounts (HSAs) or health reimbursement arrangements (HRAs), employers—and employees—can contribute tax-free to employees’ accounts. Fewer dollars allotted to premium and more dollars sheltered in pretax accounts help to mitigate the trend of sizable annual increases.

Even if small businesses can’t afford to offer group health insurance, they can still contribute funds pretax to their employees’ private health care plans thanks to a bill, HB818, which passed in June.  This provision allows employees a broad choice of plan options at affordable prices (a family of four could purchase a private plan for about $250 per month), while reducing costs for the employers.

Small business owners can also help lower health insurance rates by educating employees about the benefits of wellness and good health. About 80 percent of health claims stem from unhealthy lifestyle choices. Informing employees of the local hospital’s health fair, organizing weight loss and smoking cessation programs, and encouraging after-hours exercise groups can reap great rewards in the form of healthier employees, fewer sick days, and lower overall health insurance rates.