Do-It-Yourself Insurance

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If you have employees who are older or in less-than-perfect health, they may have a problem obtaining meaningful individual insurance.

For entrepreneurs, this complicates matters considerably. If you have employees who are older or in less than perfect health, those employees may have a problem obtaining meaningful individual insurance. What will you do with employees who won't qualify for individual insurance? And how will you handle the bellyaching of those who are uprated?

Indeed, even healthy employees may face difficulties in the individual market down the road. Insurers are forbidden by federal law from "re-underwriting" people once they've been accepted into a policy. But they are allowed to reexamine them if they switch plans. A low-frills policy that looked like a bargain when you were young and healthy may be less appealing as you grow older. And no matter what, insurers are permitted to increase premiums with age--so business owners who hold the subsidy steady are in effect providing less of a benefit with each passing year.

And there's one more problem with nudging employees out into the individual market: They might not be ready for it. Two-thirds of employees with health insurance prefer that their employers select health plans for them rather than offer them a cash account option, according to a September 2005 survey from the Commonwealth Fund, a New York City-based think tank. "To the extent that your competitors continue to offer group health benefits, you may have difficulty attracting and retaining high-caliber employees," says Joe Martingale, national leader for health care strategy at the benefits consulting firm Watson Wyatt. Of course, people who don't have any insurance at all might feel differently about the matter.

At the PGA Tour, about 45 caddies out of 200 have signed up for the new plan. John Buchna, 50, who's caddied for Joey Sindelar for 22 years, was among the first to sign up. His new policy is not exactly a bargain--the premium runs $5,000 a year--but the Tour's $1,000 subsidy made it affordable for him. "It's a very kind gesture," says Buchna. "But I'm just anxious to see what they'll do next year."

Business owners worried about their own health care problems might want to wait and see how the individual market shakes out over the next few years. Martingale, for his part, remains skeptical, and says he won't recommend such policies to his clients until premiums are affordable and stable for both the sick and the healthy. "Employers look forward to the day when they can get out from under the terrible burden that providing health benefits represents," he says. "But that day is not now."

Flying Solo

Individual insurance policies are becoming easier to find--though prices vary widely from state to state. Here's a sampling of average annual premiums.

Resources

To read America's Health Insurance Plans' study on individual insurance, go to ahipresearch.org. For more on Paul Zane Pilzer's The New Health Insurance Solution, including a state-by-state guide for shoppers, go to tnhis.com.

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