Health insurance: big benefits for small companies: are you so small you can't afford health insurance for your employees? There may be options.

• Author: Myers, Deborah J.

For small companies, affording a quality health care plan for employees is like walking on a narrow balance beam. It's hard to stay in balance without falling on the side of stingy benefits that provide little value to employees or else excellent benefits with excessive premiums. You get what you pay for.

Rick Johnson, sales representative with Baldwin Financial Concepts in Anchorage, said that the average renewal rate increase is 15 percent to 30 percent. "At this stage of the game, (increases) won't end. The major companies I work with are telling me we will keep seeing that. It's tough because the choices are so limited. We have so few insurance companies to choose from that are quality companies."

Jim Dunlap, owner of the Dunlap Agency in Fairbanks, has seen the same development.

RISING COSTS

"Health insurance premiums are going up so rapidly," he said. "Many are decreasing coverage and increasing deductions. They are putting off more costs on the individual because companies are having trouble affording it."

Although minimizing coverage or increasing the percentage of each employee's contribution are the easiest solutions to the problem of skyrocketing premiums, other options can keep quality plans affordable both to themselves and their employees.

Consumer-driven plans are the newest development, according to Spencer Biegel, owner of Alaskan Benefits Corporation Inc. in Anchorage.

"They are more in control of their health expenditures," he said. "The employee is saving his hard-earned money."

The first step in this direction was the introduction of the Medical Savings Accounts. But having so many limitations on how they are managed has caused their popularity to wane.

Available through legislation signed into law by President Bush in December 2003, Health Savings Accounts and Health Reimbursement Arrangements are gaining in popularity. HSAs are the next generation of Medical Savings Accounts.

"We've seen renewals (with these plans) increase so much," Johnson said. "This is one option that is available to get control of costs," Johnson said.

The HSA is a tax-sheltered savings account similar to an Individual Retirement Account, only it is designated for health care expenses. A minimum $1,000 deductible ($2,000 for families) insurance plan is required to accompany the HSA, and the high deductible keeps premiums low.

Employees use the HSA funds for routine medical expenses and then rely upon insurance for catastrophic care. Employers and/or employees can contribute to the account pretax, $2,600 for singles and $5,150 for families annually. The money set aside can be used to satisfy the deductible expenses, co-insurance or other medical payments. As long as the money is being spent on medical, dental or vision, it's okay.

Biegel has managed a group plan...