Health insurance options for the small business owner in Pennsylvania

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Perhaps one of the most critical decisions to make when you’re a Pennsylvania small landscape or lawn care business owner is what kind of health insurance you can afford. On March 23, 2010, President Obama signed the health care reform bill, which has raised questions of how this will affect small business owners wanting to buy insurance coverage as part of their benefits package.

Small business advocates like the Pennsylvania Chamber of Commerce and SCORE, as well as health insurance companies like Pennsylvania Blue Cross/Blue Shield providers, advise their clients on their health insurance options. The Pennsylvania Insurance Commission discusses what employers need to know about their policies when it comes to state law.

Health insurance for the small business owner in Pennsylvania

Melissa Fox of the Pennsylvania Insurance Commission (www.insurance.pa.gov/portal/server.pt/community/insurance_department/4679) explains the Health Care Insurance Portability Act (HIPAA) and how it affects small businesses purchasing health insurance for themselves and their employees in the state. “Pennsylvania has enforcement authority over the federal portability requirements. Under Pennsylvania HIPAA, small businesses are guaranteed access to any small group product on the market, and they’re guaranteed renewability. This does not impact the rate, but does impact whether they can get and keep insurance coverage. In addition, small group coverage has limitations on how long an employee may be made to wait before getting coverage for a preexisting condition, and someone with small group coverage may move to another policy without having an exclusion period if they had ‘creditable coverage.’”

Fox also explains that in Pennsylvania, employers are not required to buy health insurance for employees, however, they see the benefits to it even if it does challenge their budget.

“They [small business owners] need to continually review their health care plans to balance what the company can afford versus which benefit package helps them retain their valuable employees,” advises Douglas C. Dyer, president and CEO of the Pennsylvania Chamber of Commerce Insurance (www.pachamber.org/).

Dyer sees that the health insurance debate in Pennsylvania does create confusion for small business owners. Additionally, they don’t have the manpower to handle the research necessary to sift through all of the options available. The common idea is to purchase health insurance through a trade association or business group, like the chamber, to get the best prices in health insurance.

The Chamber of Commerce offers the following health insurance packages for member-employers and their employees. “We offer our members every major health care carrier in the marketplace and the professional consultation in order to consider all the health care plans available. This helps them achieve controlling their company’s costs, while also offering the most affordable and comprehensive benefit packages for their employees. To complement our health plan offerings, we package unique and discounted supplemental employee benefits, [such as] life, dental, vision and disability for our members. It is important to note that we also have a full portfolio of health care products for the growing sole proprietor and individual health care market. In addition, we are unique in the marketplace in that we specialize in small business employee benefits and provide dedicated administrative and customer support to our customers through our own professional, in-house staff,” Dyer explains.

Michael Weinstein of Highmark, a Blue Cross/Blue Shield (BCBS) company for central and western Pennsylvania, also advises small business owners to consider trade associations, trade brokers and insurance agents to help guide them through the health care insurance buying maze. He says, “Associations and insurance brokers and agents can help a small business compare health benefits and help small businesses select a health plan option that is tailored to their needs.”

A word of warning to small business owners. In Pennsylvania, when an employer provides health insurance for their crew, they are required by law to make sure the policy covers the required benefits, which include alcohol and substance abuse, conversion and mental health parity.

For group and individual coverage, the policy needs to include: chemotherapy and cancer hormone treatment; childhood immunizations; diabetic supplies and education; emergency reimbursement; gynecological examinations; inclusion of child medical support; mammography screenings; mastectomy with reconstructive surgery; maternity; medical foods; newborn babies; and physically handicapped/mentally retarded dependent.

Certainly, this list is extensive. Thus, the lawn care/landscape business owner must make sure they know specifically what their insurance policy covers. “Providing health insurance is not required. However, if you provide coverage, there are certain mandated benefits that must be included in the policy,” says Fox.

Types of health insurance

Shopping for the best buy in health insurance can be complex. Terms like health savings accounts (HSA), medical savings accounts (MSA), health maintenance organizations (HMO), preferred provider organizations (PPO) and major medical plans can be confusing.

“Depending on the objective of the employer, there are advantages to each of these plans,” explains Dyer. “However, we would explain it as a cost differential rather than a cost savings. The benefits of the different plan designs will represent varying costs. In my opinion, it is very difficult to make the statement that cost savings occur in a health care plan. Any reduction in health care premiums is always associated with a reduction of benefits. The perception of ‘cost savings’ really is contingent upon whether the employer passes those lower premiums onto the employee or decides to absorb those savings within the company’s costs. In summary, the direct and indirect cost of a healthcare plan is related to the degree of responsibility the employee assumes in embracing healthy lifestyle changes, thus can control their out-of-pocket expenses. In that case, you can truly say there are cost savings.”

Stephen C. Lawrence, a volunteer with SCORE (http://scorescranton.org/home.htm) in Scranton, Pa., works with many people in planning their business ventures. He says, “Most SCORE clients are just starting out, so it’s usually just a family situation. In the cases where there are employees, health insurance usually isn’t offered. I [counsel] people to consider catastrophic coverage first, a $5,000 to $10,000 deductible plan, just to protect their major assets. Few have the means to pay for a complete plan unless they are fortunate to ride on the coattails of a spouse who has coverage by an employer. Fortunately, most individuals starting a business are fairly vibrant and are not major users of health insurance on a daily basis.”

Lawrence does address that few startups buy any insurance, even an HSA, where funds are taken out of the employee’s paycheck before taxes and are put into a medical savings account. HSAs are usually associated with catastrophic insurance.

“I try to get people to look at HSAs, but few do. Candidly, few even opt for a catastrophic plan. They just do without or get covered by a spouse. My experience is that cost is probably the biggest issue people face. Unless there is some form of preexisting condition preventing a change, most clients will shop for the best price or will go without, [which] is something I [counsel] against,” Lawrence explains

A word to the wise

“First and foremost, the small employer needs to seek a qualified, experience insurance professional to navigate through the complex process of securing the right health care plan for their company. We recommend that you begin working with your insurance professional at least 30 to 60 days prior to the effective date of the coverage to allow sufficient time to explore all available options. Specifically, for small business owners of lawn care and landscaping, the insurance professional should make them aware that carriers have specific participation requirements and different underwriting processes that impact how the demographics of their company, [such as] age, gender and SIC code, may affect the cost and benefit solution available to them,” Dyer advises.

Lawrence recommends Assurant Health (www.assuranthealth.com/corp/ah/), which meets the needs of new, small businesses, as well as being a well-funded insurance program. “I have a $12,000 deductible plan and ostensibly self-insure myself for the first $12,000. It works well for me since the premiums for my daughter and I are literally $700 less per month than being added to my wife’s plan offered through her employer,” he explains.

“A significant portion of Highmark’s small employer customers still offer health plans with virtually no cost sharing by employees. Most large companies have health plans with some level of employee cost-sharing. Highmark is working cooperatively with insurance brokers and agents to encourage small employers to offer more health benefit programs that include some level of employee cost-sharing,” Weinstein says.

Martrisciano advises small business owners to know what they’re buying. “Make sure that you are comparing apples to apples; know the value added by certain features; and protect your employees by choosing a reputable and stable health insurance carrier.”

Overall, these are uncertain times when it comes to purchasing health insurance. The best option for small lawn care/landscape business owners in Pennsylvania is to secure health insurance coverage through a turf trade association or the Chamber of Commerce to keep costs down. Otherwise, securing a reputable insurance agent or broker ensures the business owner gets the best deal in town for his company’s health care needs.

Beware of Health Insurance Scams

The National Association of Insurance Commissioners (NAIC), www.naic.org, a volunteer organization made up of insurance commissioners from all 50 states, Washington, D.C., and the five U.S. territories, warns small business owners to be vigilant against insurance scams. NAIC lists the following five points in their information sheet, used with permission, titled “Consumer Alert: Protecting Small Businesses from Fraudulent Health Plans:”

  1. Make sure you “read the fine print. Fake insurance policies can take a variety of forms, but they’re almost always marketed to make you think you’re buying insurance protection for your employees. Read through all materials carefully and thoroughly, and don’t assume a plan is legitimate just because it contains common insurance jargon,” says the NAIC.
  2. Be wary of an offer that sounds too good to be true, including one-time offers, below-average insurance costs, generous promises, few coverage limitations, an agent who evades your questions and if you’re required to pay money up front when applying for the health insurance plan. According to the NAIC, paying money when you sign is not a normal health insurance practice.
  3. You need to do the research. Make sure the health insurance company and the insurance agent are licensed. You can check licensures by going to the Pennsylvania Insurance Commissioner’s Web site at www.insurance.pa.gov/portal/server.pt/community/insurance_department/4679.
  4. “Get more information. Education is your best defense against fraud,” says the NAIC. Again, going to the Pennsylvania Insurance Commissioner’s Web site should provide you with the information you need to make an informed choice on which health insurance carrier you can trust.
  5. Finally, the NAIC says, “If it seems to be too good to be true, it probably is.”

The author is a freelance writer based in Ephrata, Pa. She writes for various trade magazines focusing on landscape companies, agriculture and business.