Health Insurance

1. 1

   In May 2003, 91 percent of small-business owners had health insurance for themselves. Approximately one-third obtained their coverage through their business. Nearly one-quarter purchased non-group coverage.

2. 2

   Those owners without personal coverage were of two types. Forty-two (42) percent had been without coverage for 12 months or less. However, 28 percent lacked coverage for four years or more.

3. 3

   Forty-eight (48) percent of small businesses offered health insurance to their employees. Forty-one (41) percent of those firms with fewer than 10 workers did so, but 78 percent of those with 20 or more employees provided coverage.

4. 4

   Eighty-three (83) percent of small businesses with employee health insurance offered a single plan. Nearly three-fourths of these were some form of managed care. A preferred provider organization (PPO) was by far the most common plan type. However, small employers continued to be much more likely to offer traditional coverage than medium and large employers.

5. 5

   The average small-business health insurance plan cost $402 per employee per month for single coverage and $732 per month for family coverage. The smallest firms paid lower premiums, probably due to less generous benefit packages.

6. 6

   The majority of small businesses (55 percent) offering health insurance required no employee premium contributions for single coverage; one-third did not require them for family coverage. Respondents indicated that they require little or no premium-sharing in order to offer a competitive insurance program.

7. 7

   Less than 10 percent of small businesses provided a flexible spending account to help shelter employee medical expenses from taxes. However, over 12 percent reimburse employees who purchase health insurance on their own. One in 20 had a medical savings account.

8. 8

   Owner/operators of small businesses indicated three key reasons for offering coverage. They do it: “because it’s the right thing to do,” to attract and retain workers, and as a mechanism to obtain personal coverage.

9. 9

   Owner/operators not offering coverage indicated that cost, lack of employee demand, and the ability of the owner to get coverage elsewhere were important considerations.

Volume 3, Issue 4, 2003
ISSN 1534-8326

Michael A. Morrisey
University of Alabama - Birmingham

• 1As the owner of this business, how do you obtain health insurance coverage for yourself? Do you obtain it:? Top 100
• 1aAre your dependents covered by health insurance the same way you are, a different way, are they not covered, OR don’t you have any dependents?
• 2ADoes your business offer a Flexible Spending Account that allows employees to set aside wages or salary to pay out-of-pocket medical expenses with tax-sheltered dollars?
• 2BDoes your business offer a Medical Savings Account that provides catastrophic health insurance coverage and a tax-sheltered health spending account?
• 2CDoes your business offer reimbursement to employees for some or all of the premiums of health insurance they purchase on their own?
• 3Does your firm offer health insurance coverage to any of your employees?
• 4A(reason owner has outside insurance) Insurance is less expensive from another source.
• 4B(reason owner has outside insurance) You prefer a plan with different coverage than that offered to your employees.
• 4C(reason owner has outside insurance) A particular health condition makes another plan preferable.
• 5A(reason to offer) It helps employee recruitment.
• 5B(reason to offer) Health insurance is not considered taxable income for employees.
• 5C(reason to offer) Employees expect or demand it.
• 5D(reason to offer) It increases employee productivity by keeping them healthy.
• 5E(reason to offer) It decreases turnover.
• 5F(reason to offer) One or more employees or their dependents have medical problems.
• 5G(reason to offer) Competitors offer it.
• 5H(reason to offer) It’s the right thing to do.
• 5I(reason to offer) A good way for the owner and dependents to obtain coverage.
• 6Do you offer more than one kind of health insurance plan such as an HMO, PPO, and traditional coverage?
• 7ADoes your business offer traditional insurance where your employees can pick any doctor they want and typically pay the same, fixed percentage of the bill?
• 7BDoes your business offer a PPO or Preferred Provider Organization which is like traditional insurance, but your employees pay less if they use doctors on the plan's approved list?
• 7CDoes your business offer an HMO or Health Maintenance Organization in which your employees must obtain medical care from a specific doctor or doctors or else none of their costs are covered?
• 7DDoes your business offer a POS or Point of Service Plan which is like an HMO, but allows employees to seek care without a referral from their primary care doctor at an additional cost?
• 7EDoes your business offer another type of medical insurance plan?
• 8There are several different kinds of health plans. Please indicate which ONE of the following your business currently offers its employees. Does your business offer:?
• 9What is the per employee total monthly cost of your firm’s health insurance coverage for single coverage?
• 9aWhat percentage of this cost of single coverage is paid by employees out-of-pocket?
• 9Aa1To ensure employees participate.
• 9Ba1To give employees tax-advantage compensation.
• 9Ca1To offer a competitive health insurance program?
• 10Including both the employer and employee contributions, what is the per employee total monthly cost of your firm’s health insurance coverage for family coverage?
• 10aWhat percentage of this cost of family coverage is paid by employees out-of-pocket?
• 11What percentage of your employees, who are eligible to participate in your health insurance plan, actually participate?
• 12Does your insurer require that a minimum percentage of eligible employees obtain health insurance through your business?
• 12aDoes your insurer require that eligible employees who do not wish to participate in your health plan or plans demonstrate that they have coverage elsewhere?
• 13A(reason NOT to offer) Employees prefer wages and/or other benefits.
• 13B(reason NOT to offer) Employees have coverage elsewhere.
• 13C(reason NOT to offer) Owner has coverage elsewhere.
• 13D(reason NOT to offer) A large portion of employees are part-time, seasonal, or turnover is too high.
• 13E(reason NOT to offer) Revenue is too uncertain to commit to a plan.
• 13F(reason NOT to offer) Business can’t afford it.
• 13G(reason NOT to offer) Employees can’t afford their share.
• 13H(reason NOT to offer) Not needed to retain good employees.
• 13I(reason NOT to offer) Setting up and funding a plan is too complicated and time consuming.
• 13J(reason NOT to offer) Plan that fits employee coverage needs doesn’t fit your coverage needs.
• 14Approximately what percent of your employees are female?
• 15Approximately what percent of your employees are under 30 years old?
• 16Approximately what percent of your employees make $10.00 per hour or less, including tips and commissions?
• 17Approximately what percent of your employees make $20.00 per hour or more, including tips and commissions?