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A Prescription for Small Business Owners

This column was authored by New Hampshire Business Resource Center Seacoast Business Services Specialist Christine Davis:

Before I started working for the Division of Economic Development, I had run two small non-profits here in New Hampshire.  Due to their size and budget, health care coverage was not offered to the employees.  The cost for a relatively young and healthy individual was a big and painful surprise to me.  I could only imagine the financial pain inflicted on small businesses that are trying to offer health care to their employees.

christine-davis1I cringed when I heard from a business owner who wanted to know what he could do to lower his health care costs.  He had just learned that his costs were going to rise by $1,000 per month this year.  Every year his costs have increased and like most businesses, he has seen a dip in revenue over the past 18 months.   The reason why I cringed is two-fold.  First, the financial increase he stated is just crazy.  Second, I don’t have any answers that can eliminate his problem and I hate that.

Although I don’t possess a magic wand (something my seven-year-old thinks she can get from the tooth fairy), I do have some thoughts I can share which might be helpful.  It is important that as a business owner you go over your policy with your provider to make sure everything is accurate and up to date.  Are there any new plans that might fit your company and reduce costs?  Have you talked to any other providers?  There aren’t a lot of options but you need to look at them all before you settle for one.  You can go to www.nh.gov/insurance to learn more about providers in the State and up to date insurance information.

One option that has been gaining more subscribers is the high deductible plan.  I switched to one myself a year ago to reduce my premiums.  It may lower your premium but you need to be prepared to cover a higher deductible, which can amount to some hefty out of pocket expenses if you have an unexpected injury or illness.  If you decided to go the high deductible route, you can buffer it with a Health Savings Account (HSA). 

An HSA is an account that you can put money into to save for future medical expenses. There are certain advantages to putting money into these accounts including favorable tax treatment. 

I also want to remind small business owners of the tax credit that became available as of December 2010.  If your business has less than 25 full-time employees or 50 half-time employees and the average pay is less than $50,000.00, you very well may be eligible for up to a 35% tax credit.  That credit will increase to 50% in 2014.  There is a gradual phase out with wages between 25-50k and 10-25 full-time workers.  Non-profits can receive up to a 25% tax credit that will increase to 35% in 2014.  This tax credit can have some real positive impact on small businesses that are covering at least half of the cost of their employees’ health care.

There are so many reasons why our health care costs have gotten out of control.  While I can’t reform the system or get Americans to take better care of their health, I can recommend that you look into the above listed options and talk to your local legislators to learn where they’re at on the issue.  Those individuals can be found by visiting www.gencourt.state.nh.us.  If you are looking for change, reach out to those who have the power to make those changes.  On February 1st, you can attend the Small Business Day at the Holiday Inn in Concord to hear from health care experts on the high cost of health insurance and what suggestions they have for reducing those costs.  You can register for this morning event, a joint effort supported by the Division of Economic Development, the Business and Industry Association of NH and numerous business support organizations, by visiting www.nhbia.org.

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