Individual Medical Coverage Surprise for Franchises

Group coverage too pricey for your franchise? For years the International Franchise Association has actively lobbied on small-business health plans, formerly known as association health plans to lower prices for its franchise members. That would be a nice bonus if they are successful but individual policies are now better than you think.

"Bryan Barnall has long prided himself on providing health insurance for the four employees of Printing Plus, his Lincoln (Neb.) commercial printer. Then his carrier upped his premiums by 50% two years in a row, and Barnall had to dump his group plan. But he didn't leave his employees in the lurch."

"Barnall's workers now buy individual policies through his agent. Each pays $50 a month toward premiums; Barnall pays the rest and gives each employee $75 a month to put into a health savings account (HSA). Barnall deducts his entire outlay from his taxes. And he has cut the annual health-care costs for his $350,000 company in half, to about $12,000. "The change initially made my employees a bit nervous, but they're all happy now," says Barnall."

Of course, most franchise systems offer system-wide health care programs, but they still are very costly for small business franchise owners. Helping with individual policies might offer better cost benefits and tax write-offs. Still, the perception among workers are that premiums and deductions are higher for individual policies.

"Despite the perception that individual policies aren't as good as group plans, a recent study by America's Health Insurance Plans, an industry group in Washington, found little difference between them. "We used to think individual insurance was expensive and lousy, but our hypothesis turned out to be wrong," says Karen Ignagni, AHIP's president and CEO."

Source: BusinessWeek, Health Care: Benefits Surprise