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Health care and the price for business

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HealthIlloA STATE HEALTH-CARE REFORM LAW passed this past summer will overhaul Oregon's health-care system over the coming years, providing coverage to thousands of the uninsured. That's the good news. The bad news is that it will likely result in higher insurance premiums for small businesses.

House Bill 2116, enacted in August, aims to expand the existing Oregon Health Plan to provide coverage to an additional 80,000 uninsured children and 35,000 low-income adults in the state. To help pay for that expansion, the law taxes most commercial insurance providers, who are expected to pass that cost on to individuals and small businesses. Larger companies that are self-insured, such as Nike and Intel,
will not have to pay the tax.

Though the 1% increase in premiums expected to result might not sound like much,
it compounds the double-digit rate increases businesses have been seeing each year, says Chris Apgar, chairman of the Oregon Small Business for Responsible Leadership health-care committee. If it becomes too much to bear, businesses have a few options to consider before eliminating their insurance option altogether.

Jill Stewart, account executive at Portland insurance agency Benefits Resources, says one way to mitigate the 1% premium hike is to set up a cafeteria plan as allowed under Section 125 of the Internal Revenue Code. These plans allow part of an employee's pay to be set aside pre-tax to either pay their share of insurance premiums or be put into a flexible spending account to cover out-of-pocket costs.

"That's money you won't have to pay on wages," Stewart says. "This way, the employer saves and the employee saves because the taxes are applied after that money is taken out."

Another option is to look at benefit structures. To lower premiums, employers can opt for a plan with a higher deductible. Though that will mean higher out-of-pocket costs for employees, it's better than offering no insurance at all, Stewart says. Employees will still be able to pay only a co-pay for regular provider visits, and they will get a discount on in-network services. Employers can also look for savings in other benefits they offer, such as life, dental or disability insurance.

"Even if they don't change anything on their medical insurance, they can look at all their
benefits to see if cost savings can be found in other places," Stewart says.

Employers might also consider upping the amount employees contribute to their premiums.

"That way, you can at least keep something in place until better times," Stewart adds.
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