SMALL BUSINESS INSURANCE IQ SURVEY
CARE KNOWLEDGE GAPS
Many Small Business Owners Unaware
of Financial Effects
of Employee Health Care Coverage
KANSAS CITY, MO. (Aug. 25, 2009) — Small
business owners are struggling to provide health insurance for their
staff and do not feel confident in determining the health insurance
that best fits their employees’ needs, according to a new survey by
the National Association of Insurance Commissioners (NAIC). The
finding highlights the need for more insurance education, even as
the debate over national health care reform continues around the
In the NAIC survey, conducted July 22-31, 2009, among a
participant sample of 500 small business decision makers, 64 percent
of small business owners responded that they are not confident
picking a health insurance policy that fits their budgets and their
employees’ needs. One-third admitted that they cannot afford to
provide health insurance to their employees.
Additionally, the study found a clear gap in understanding the
fiscal responsibilities associated with offering health insurance.
Of the small business owners surveyed, 60 percent said they are not
confident they understand the tax implications of paying for a
portion of their employees’ health insurance premiums. Only 27
percent say they understand all the factors that can affect their
small group health premiums.
“In this economic environment, small business owners need to be
especially mindful of any decision that will affect their financial
future,” said NAIC President and New Hampshire Insurance
Commissioner Roger Sevigny. “Now, more than ever, it is important
they get smart about their choices and consider the implications
that making a bad decision could have on their business and their
How to Improve Your Small Business Health Insurance
These tips will help small business owners better understand
their health insurance needs and requirements.
- Before purchasing any insurance policy, interview several
licensed insurance agents specializing in the health insurance
needs of small businesses.
- Compare the costs of equivalent coverage from several
insurers to ensure you are getting the best deal.
- Ask how premiums have increased over the past five years.
- Talk to other small business owners about their experiences
with health plans and insurers.
- Confirm with your state insurance department that the agent
or broker you are dealing with is licensed. Visit www.naic.org/state_web_map.htm
for a link to the state insurance department Web sites.
- Before selecting a health plan, survey your employees to find
out what coverage they consider particularly important.
- For example, if a number of your employees are married and
plan to have children, pregnancy-related coverage likely will be
extremely important to them.
- Understand the factors that influence the cost of the small
group coverage in your state.
- States vary with respect to the methods they permit for
calculating premiums. The range of premium rates an insurer can
charge a small business are typically set by state law for
employers offering plans with the same benefits design and which
have similar “case characteristics” (e.g., age and sex of
employees, geographic location of the business and other
objective information). In other states, a method called
“community rating” is used to determine premiums, where everyone
in a specific geographic area pays the same rates for health
- Take advantage of the tax benefits available to your company.
- Businesses can generally deduct 100 percent of the premiums
they pay to qualifying health plans for their employees. Be sure
to discuss this matter with your accountant or tax advisor.
- Tap the resources of the NAIC and your state insurance
- Know your rights with health insurers by checking with your
state insurance department. Typically, small group health plans
must treat equally all of your eligible employees (generally
full- or part-time employees who work at least 30 hours a week).
- Determine if your state has a special program to assist
small business owners with providing employees and their
dependents with health insurance.
- Understand COBRA and other federal regulations for small
business employers offering health plans.
- Visit the NAIC’s Consumer Information Source (CIS) at https://eapps.naic.org/cis to access key
information about insurance companies, including closed
insurance complaints, licensing information and key financial
Get smart about your insurance needs. For more information about
auto, home, life and health insurance options — as well as tips for
choosing the coverage that is right for you and your small business
— visit www.InsureUonline.org or take the small business
insurance quiz at www.insurance.insureuonline.org/smallbusiness/small_biz_quiz.htm
About the NAIC
Formed in 1871, the National Association of Insurance Commissioners
(NAIC) is a voluntary organization of the chief insurance regulatory
officials of the 50 states, the District of Columbia and five U.S.
territories. The NAIC has three offices: Executive Office, Washington,
D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office,
New York City. The NAIC serves the needs of consumers and the industry,
with an overriding objective of supporting state insurance regulators as
they protect consumers and maintain the financial stability of the
insurance marketplace. For more information, visit www.naic.org.
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