I have a home-based business, and I’m thinking about expanding and hiring a staff. I read that healthcare costs might sink my business. What should I do?
–D. McKay, Atlanta
Well, you’re right. Health insurance costs are high and continue to rise (see Enterprise, August 2003). These costs are making it increasingly hard for small businesses to offer health insurance to their employees.
With that said, there are two main types of health insurance: health maintenance organizations (HMOs), which provide you and your employees with a list of physicians you can use, and preferred provider organizations (PPOs), which give members a choice of either in-network or out-of-network benefits.
Speak with other business owners about their providers and calculate healthcare expenses for a year to be sure that you can handle this from a cash-flow basis. Also, don’t seek out the cheapest solution, but look for high-quality car. Opt for large deductible plans with high choice.
The good news is that the House Small Business Committee introduced the Self-Employed Health Care Affordability Act of 2003 (H.R. 1873) on April 30, which would allow self-employed business owners to deduct their health insurance costs when calculating payroll taxes (Social Security and Medicare). This would effectively reduce those costs by more than 15%.
In the meantime, visit the Employee Benefit Research Institute Website (www.ebri.org). The site offers information designed to advance the knowledge and understanding of employee benefits. Also, the Kaiser Family Foundation (www .kaisernetwork.org) helps business owners stay on top of policy changes about healthcare options.