Small business owners who want to offer health care insurance to their employees face some tough decisions when choosing the plan they buy.
Maryland law requires companies that write health care insurance policies to offer coverage without pre-existing condition limitations, said Al Neville, president of Neville and Associates, a Fallston-based company with about 100 clients. Other legislature-required coverage is spelled out in the state?s “Guide to Purchasing Health Insurance for Small Employers,” which is available at mhcc.maryland.gov/smgrpmkt/index.htm.
Maryland, he said, has more than 50 legislative mandates that health care insurers must offer. That drives up the cost of insurance, especially for small business owners ? defined as those with between two and 50 employees.
Rates for small business owners who participate in the state group are determined by the average age of employees, not the number of employees a company enrolls in the plan, he said.
“Let?s say there is a three-person group and the average age is 30 and there is another group of 42 employees with an average age of 45. The three-person group pays less because the average age is lower.”
That puts employers in a tight spot when deciding who they will hire.
“For some businesses, they may look at hiring someone who is older and be weighing hiring a 55-year-old to a 25-year-old. They do the same job, so I think they are going to go for the younger person,” he said. “If they hirer the older employee, there is the potential that their rates are going to rise at the next renewal period.”
The state?s Web site offers sample rates for small groups, allowing small business owners to better calculate their potential costs, according to the Maryland Insurance Administration.
Health savings accounts ? pre-taxed dollars set aside to use for out-of-pocket health-related expenses ? are beginning to gain popularity in the state, “but I don?t know how successful that is going to be,” he said. “The trend is moving in that direction.”
