And The Survey Says – New Numbers Regarding Small Biz And Health Insurance In Texas

A 2006 survey, released by the health insurance trade group America’s Health Insurance Plans (AHIP), offers a snapshot look at small group health insurance plans throughout Texas and nationwide. The survey has once again stirred up debates over whether health insurance is affordable enough to allow small businesses to cover their workers, or if sweeping changes are needed.

The survey showed that small businesses — those companies with 50 employees or fewer — actually paid a slightly lower health-plan premium than that reflected in a previous survey of mostly larger companies.

“The take-home message is that small businesses have affordable options,” said AHIP President and CEO Karen Ignagni. “This is the only survey of its type on very, very, small businesses,” she said. “The ‘less coverage’ hypothesis for small businesses is not what the data show.”

The AHIP survey specifically reports that more than 650,000 small companies showed they paid an average monthly premium of $311 for individual members, and $814 for a family (“family” generally meaning a family of four).

AHIP officials also noted that the monthly premium for individual members is down from the $335 average premium revealed in an earlier survey done by the Kaiser Family Foundation, which focused on firms with three or more workers. The premium decrease, AHIP officials said, was due to cost sharing, which tends to be more significant in small-business health plans, compared with those of large firms.

The AHIP survey — which divided the small companies into those with 10 or fewer workers, 11 to 25 employees and 26 to 50 workers — also revealed that premiums dropped slightly as company size increased.

But the survey’s portrait of a robust small-business insurance market is misleading. The health insurance industry could do even better by its mom-and-pop customers if legal barriers weren’t standing in the way, Ignagni added.

According to the survey, small businesses state they want more affordability. “And we want to customize benefits for small businesses but we’re prevented from doing that by state mandates,” she said. “We could be doing more.”

But not everyone agrees with the survey’s findings. Todd McCracken, president of the National Small Business Association (NSBA), was skeptical about the AHIP survey and its conclusion about small companies’ access to health coverage for their workers.” We certainly don’t think health insurance is affordable for small business,” he said. “AHIP is trying to make a case that it’s more affordable than people think.”

McCracken stated that small-scale companies face unique challenges in covering their staff, such as higher health-plan administrative costs and less stable premiums. Oftentimes, one change in a tiny workforce — like the replacement of a young, healthy worker with an older, less healthy one — can keep premiums in a constant state of flux. With this kind of change “more than half of small businesses can’t afford health insurance,” he said.

The NSBA currently represents about 65,000 companies with an average workforce of thirteen employees. McCracken reiterated that lower premiums for small firms evidenced in the AHIP poll reflect the fact that smaller companies are increasingly making their workers pay more for health benefits, whether in the form of higher premium contributions or bigger deductibles and co-pays.

There is also the question whether the survey might be leaving out some of the states in which the market is dominated by (non-AHIP) Blue Cross & Blue Shield Plans, where tighter rating rules drive premiums higher.

McCracken said his group would support legislation that changed the current premium-based state tax laws — which don’t affect self-insured companies or those that don’t buy health insurance — into a more “broad-based” tax, such as an income or sales tax. But aside from piecemeal laws to cure the problem of affordability, “We’re continuing to urge Congress to look at the bigger picture,” he said. And how should that big picture look? “We would support something similar to the law recently passed in Massachusetts, where everyone has to have health insurance,” McCracken.

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Attention Insurance Agents – Data Suggests Women Need More Life Insurance Coverage

Recent studies have revealed some interesting facts about changes in America’s workforce – and the need for insurance agents to address these trends:

  • Women make up almost 50 percent of the U.S. workforce – and 40 percent of them have no life insurance.
  • Typically, women’s coverage is only about 70 percent of what men carry.
  • Most U.S. households are dual-income households – yet they are more likely to buy coverage for husbands than wives.
  • 30 percent of wives earn more money than their husbands, but may not carry enough insurance to reflect this difference – if they have life insurance at all.

What’s the takeaway from all this?

Women in America need to carry more life insurance to ensure the financial well-being of their loved ones. While the gap between women’s coverage and men’s coverage is narrowing, many women simply don’t carry enough insurance to cover the financial value they provide.

What Agents Need to Keep in Mind

Insurance agents can provide an important service by presenting options that cover both breadwinners in a family – and by helping those customers understand the financial hardship they could face without the female wage earner’s income.

Research shows that, despite the gender gap in coverage, women actually place more value on life insurance than men. They also have a different approach to shopping for life insurance:

  • Women place more value on building a relationship with their insurance agents.
  • They tend to be more deliberate in their approach, i.e., asking more questions and wanting more educational materials and resources to study before making a decision.
  • Women are more likely to follow up on agent referrals from people they trust – as well as provide referrals to friends and family if they’re happy with an agent’s service.
  • They’re also more likely to request regular policy reviews.

Remember: All Women Need Proper Coverage

It’s not just women in two-income families who need insurance. Take a look at your customers and consider how you can provide coverage to:

· Single mothers – For sole (or primary) breadwinners, life insurance is even more crucial than in households where another source of income exists if one parent dies.

· Full-time homemakers: Most people now recognize that full-time mothers and homemakers provide free services in the home – from cleaning to childcare and more – that would otherwise cost tens of thousands of dollars annually. It’s crucial that, in the event of tragedy, families have protection to cover these expenses.

· Single women: Loans. Mortgages. End-of-life expenses. Most people don’t want these burdens to fall on their parents or other loved ones. Additionally, life insurance can provide future financial stability through accumulating cash value or, if marriage and family is in the future, helping to protect husbands and children.

Women have made tremendous strides in the workplace and other areas, but a serious life insurance gender gap still exists. As insurance professionals, it’s a gap we can help close to ensure that all of our customers have the protection they need.

Sickness Doesn’t Discriminate, So Why Should Insurance?

Everyone can get sick or injured. But when it comes to protecting their lifestyle with insurance, it seems females have some catching up to do.

Historically speaking, insurance was sold to the main breadwinner. And more often than not that was the husband.

Today men still earn more, on average, than women. But the gap is closing fast – Australian women now earn 92% of male incomes. And many women out-earn their husbands. So you’d expect more women would be taking out life insurance to protect their income and their lifestyle.

But despite women making up 45% of the workforce, they still represent only 15-20% of all insured incomes.

It’s not just about income

Women are often more financially vulnerable than men – mainly because they typically spend less time in the workforce.

This is partly because of children. But women are also more likely to retire early. And they’re often the ones who have to take time off to look after children or elderly relatives.

Less time in the workforce means less savings, less superannuation, and less of an ability to recover from financial setbacks.

And since women live longer than men, these setbacks can be even more financially damaging over time.

What types of insurance should women have?

Income Protection typically covers up to 80% of your income if you can’t work temporarily because of sickness or injury – making it extremely valuable for working women.

To protect yourself against diseases like cancer, you can take out Recovery (also known as ‘Trauma’) insurance. It can pay a lump sum on diagnosis – helping you replace your income, and assist in covering the costs associated with treatment.

Life and/or Total and Permanent Disability (TPD) insurance can provide a lump sum to you or your beneficiaries if you die or are seriously disabled. This can be vital if you have a family and/or a mortgage to look after.

If you’re self-employed or run a business, you can also cover your fixed business expenses if you can’t work temporarily because of sickness or injury. This could include the cost of finding a replacement if you need one.

It’s cheaper than the alternative

You may not be aware of how much cancer treatment costs. The Cancer Council of NSW estimates a woman with breast cancer could be faced with over $40,000 in lost productivity and out-of-pocket expenses. And that the average lifetime cost of cancer equates to 1.7 years of a household’s income.

This helps put the cost of insurance in perspective.

Strategies to make insurance more affordable

There are a number of ways you can reduce the effective cost of your premiums.

For example, income protection and business expenses insurance premiums are often tax-deductible.

You may also be able to reduce the effective cost of Life and TPD insurance by taking it out inside super – using your pre-tax money to pay premiums. Bear in mind there may be some restrictions on your benefit if you insure inside super.

If you’re eligible for the Government co-contribution you may be able to use this to help pay your insurance premiums. This also gives your retirement savings a valuable boost.