Small businesses grapple with health insurance decisions

As health insurance rates continue to rise, small business owners have to decide whether to offer health insurance as a benefit to their employees or let them purchase it on their own through the individual market.

Nicholas Lee, owner of Glacier Distilling Company in Coram, said he’s never liked mixing health insurance with work. But as he and his employees feel the weight of growing insurance costs, it’s a conversation that’s consumed recent weeks.

“To me, those things should be separate like church and state — and I know that’s a debatable philosophy,” Lee said. “But with the premiums we’re all facing, I have to consider, or reconsider, all options that could be good for me and my employees.”

Lee was one of the small business owners who filtered into the Kalispell Chamber of Commerce this week to talk about what to do with rising health insurance costs.

The greatest stress small businesses face right now is the cost of health insurance, according to a survey released by the National Federation of Independent Business this September.

The survey asked 20,000 members of the federation to evaluate 75 potential problems on a scale from a “critical problem” to “not a problem.” The cost of health insurance is the only issue more than half of respondents — roughly 52 percent — marked as critical.

According to the Medical Expenditure Panel Survey, the average premium for an individual health insurance plan was $2,889 per employee in 2001. By 2015, that number had grown to $5,963 — outpacing inflation and wage growth.

In July, news spread that Montana health insurance providers requested even larger rate increases for 2017, some beyond 50 percent.

Daren Engellant, a broker with Glacier Insurance Strategies, said those numbers terrified businesses and individuals across the state.

“We all thought ‘yikes’ when we saw what’s coming next year,” he said to a small audience of business owners at the Kalispell Chamber of Commerce earlier this week.

One woman nodded as he talked. “It’s just not affordable,” she said.

Lee opened his whiskey distillery in 2010, the same year the Affordable Care Act was signed into law.

He said the law, also known as Obamacare, created a good deal for his handful of full-time employees to buy health insurance.

The Obama Administration announced in October the average cost of health insurance will increase by 22 percent in 2017. The announcement came as insurers work to balance their rates to match the new shape of the market created by the after-effects of the act.

According to Health and Human Services, 85 percent of consumers will qualify for federal subsidies that will prevent them from experiencing the increases. In Montana, about 83 percent of shoppers will receive those tax breaks.

Health insurance consumers have until Dec. 15 to see if they’re in the minority that will face the full increases, and to shop for their best health insurance deal on healthcare.gov.

SOME PEOPLE have advocated to give the Affordable Care Act more time to adjust — it’s allowed an unprecedented number of Americans to access health care. Others have said the cost will never balance out and the nation’s health-care system needs reform.

“Perhaps this presentation changed last Tuesday,” Engellant said to the Flathead business owners. “I don’t know if anybody expected [President-elect Donald Trump} to win, but he’s now vowing to change the Affordable Care Act.”

Trump ran a campaign that promised to repeal Obamacare. But last week, he told the Wall Street Journal he wants to keep certain rules attached to the law, such as a system to protect people with preexisting conditions from being denied coverage and continuing to allow young adults to enroll in their parents’ insurance plans.

Engellant said whatever happens, he doesn’t expect changes to filter down to shoppers for a while.

“I think change by 2018 would be pushing it,” he said. “Trump may relax penalties, or change policy, but insurance carriers can’t change on a dime. As far as coming up with new products by carriers, it’s like building a house — you need designs, and then building is a slow process.”

He said small business owners feeling the weight of insurance hikes going into 2017 need to create an individual plan that works best for their company.

Some companies may fare better on a group plan, he said.

“While we’re seeing major increases on individual plans, the good news is in the Flathead area, group plans, at least through Pacific Source, only saw a 6.5 percent increase,” he said. “Now that’s acceptable.”

He said other small business owners should stick to individual plans if the majority of their employees qualify for federal subsidies based on their income.

“You really just need to look at your individual situation, talk to a broker and see what the best outcome is,” he said. “It’s all about surviving, trying to get to the next phase.”

LEE IS not sure how many hours he’s spent trying to figure out what plan works best for Glacier Distilling.

The only thing he’s certain of is that health insurance has changed a lot since he launched his business, and that it will continue to change.

“It’s about strategy now. It’s going to be very interesting conversations with each employee. ‘What’s your situation? How can we figure out the best for both of us?’” he said. “I have four full-time employees, that’s not a lot anymore, but to spend this much time to figure this out is kind of crazy. My head is spinning.”

For more information or to consult with a local certified insurance agent, go to montanahealthanswers.com.

To shop for health insurance, go to healthcare.gov.

Reporter Katheryn Houghton may be reached at 758-4436 or by email at khoughton@dailyinterlake.com.