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Premium content from Austin Business Journal by Sandra Zaragoza, Staff Writer
Date: Friday, February 10, 2012, 5:00am CST
Staff Writer - Austin Business Journal
Business owner Debbie Ligon had a tough decision to make last year about health insurance for herself and her employees.
Ligon's 48-year-old, family-owned security firm - Master Burglar Alarm Company Inc. - had always paid 100 percent of the premiums for its employees health plan. But last year Ligon couldn't make the numbers work, so she had to have her employees carry some of the costs. The company's 22 employees, including Ligon and her husband, each now pay about $100 a month for insurance from Assurant Health.
A hundred dollars is a lot for an hourly employee, Ligon said.
"It just got to where it was so expensive. Our employees have been here for 20 or 25 years. They are family," Ligon said. "I try to take care of them, but there is only so much in the pot."
Ligon is not alone making difficult health insurance decisions year to year. For those making insurance renewals this year, choosing insurance has gotten tougher with rising health care costs and a perceived uncertainty related to health care reform. As a result, more businesses are asking employees to shoulder more of the burden by paying increased premiums, higher deductibles or both, experts said.
"It's one of two big trends facing small businesses in Texas," said Allan Einboden, CEO of Scott & White Health Plan.
About 30 percent of small businesses in the Lone Star State offer health insurance to employees, according to a 2011 report by the State Comptroller's Office. In comparison, about 60 percent of small businesses nationally offer health insurance.
The first concern is that "small employers are dropping their coverage in Texas at an alarming rate. We've seen it go from 50 percent of businesses to only 30 percent of businesses," Einboden said. "The other trend we are seeing is that employers are asking their employees to pay more."
Debbie Cullum of Acoustical Resources Inc., a maker of sound absorbing materials and panels for music venues and theaters, was facing "a bitter pill" with an 80 percent rate increase this year over last year for the same plan. She shopped around before deciding to stay with the Scott & White Health Plan.
"When we were able to afford it as a business, we tried to pick up as much of the tab as we could to make it reasonable," Cullum said, adding that her company is paying up to 80 percent of the costs of insurance for its employees this year. "We are all picking up the increase, but this year we had our employees pick up the increase too."
Acoustical Resources increased the deductible and out-of-pocket expense for eight employees this year; employees, including Cullum and her husband, will pay $90 a month for insurance, compared with $15 a month last year. To cut costs a little more, Cullum also discontinued the life insurance benefit - a loss that, to her surprise, employees didn't seem to mind much.
Still, employers in Central Texas are faring better when it comes to the cost of health insurance than their peers in other states, Einboden said.
"Nationally, [Texas] looks really good from a perspective of how much it costs to provide health care here," Einboden said. "It's also a great place to live from a lifestyle and fitness environment. The Austin and the Round Rock area is a healthy place to live, and as a result we have lower health care costs by comparison to the rest of the country."
The average monthly premium for an individual in 2010 in Texas was $409.45 per month, compared with the national average of $444.24 per month.
Another bright spot is that employers with 25 or fewer full-time employees are eligible to receive a tax credit of up to 30 percent of their employer contributions until 2013, and up to 50 percent of employer contributions from 2014 onward.
Melissa Perryman, an independent broker and board member of Austin Association of Health Underwriters, said insurance companies seem to be developing more options for small business owners in order to retain their business.
Health insurance companies - Aetna, United Healthcare, Humana, Scott & White Health Plan and others - are designing more plan options for small businesses, such as a dual option plan that gives employees the choice between a rich benefit plan with higher premiums and a lower out-of-pocket plan with a higher deductible.
More insurance companies are also offering plans to small businesses with as few as two employees.
"They are being more flexible for the Austin market and to small businesses in general," Perryman said.
Perryman said she deals frequently with clients who are on the brink of dropping their coverage altogether because of higher costs.
"I'd like to think that I instill the value of having health insurance. I have to remind them that it pays to offer it," she said.
"In the next 12 months, the launch of health insurance exchanges and an increase in the federal poverty level is expected to significantly change the health insurance landscape," Einboden said.
"Sixty-seven percent of the uninsured are employed. That means suddenly some of those employers are going to have to provide coverage if they are a large enough size. Then there is going to be this exchange where an employee will get a subsidy to get coverage," he said. "That's probably going to be the biggest change. ... Those options and programs are going to be announced and talked about quite a bit."
Katherine Voss, APR
Scott & White Healthcare
512-218-6384 (Round Rock)