Since it is a presidential season, and heath care is up for debate once more, I want to speak to you a bit about my personal experience with health care in America, pre and post Obamacare. This story is the first part of three.
Health Care from the Small Business Perspective.
In 2000, I went into business with my soon-to-be-husband. We were both IT consultants and the dotcom bust hadn’t totally hit us yet in Minnesota. All in all, hourly rates we pretty high, hours plentiful and things were pretty good. I was young, 25, and while I didn’t feel an urgency about having health care (I did have health care through my previous full-time employer), it seemed like it was in our means to have it and a responsible thing to do. Additionally, our attorney had suggested it to us as a way to manage our tax burden.
So we met with a nice agent who explained to us how it works. If we get a health care plan as a business, our premiums are paid from pre-tax dollars. That sounds pretty good right? Also the business must offer health care to all employees by law. Again, not so bad for us, its just the two of us. Finally, the insurance company cannot refuse to cover anyone who receives their health insurance as a benefit from the business. While this wasn’t an issue for us, yet, this also sounded great! So we got a middle-of-the-road plan that included eye care and dental with a moderate deductible. With me being 25 and female (omg baby potential!) and my fiance at 30, our monthly premium was about $450. Pre-tax! Not too shabby at all.
So what is the catch? Well the insurance company can raise the monthly premium pretty much whenever they feel like it. But that wasn’t going to be an issue for us, right? I mean how much are they really going to raise it? 5%, 10%?
The First Year
Our policy went into effect January 1, 2001. And as it happened, I ended up with appendicitis on January 6, 2001. That very unplanned surgery went without any major complications, we maxed our $1000 deductible and our insurance took care of everything else. The rest of the year was uneventful, just normal checkups, eyes checks and teeth cleaning. Nine months later we get the 2002 renewal and our premium had been raised to $950 per month. The insurance company didn’t make a profit on us that year so they wanted to recoup their losses.
Now for a moment, imagine if we had 5 -10 employees and our premium got doubled!
The Second Year
We called our agent, he was not surprised by this in the least. We applied as a business to a different health plan, again we came in on a low premium. However, this plan had an entirely different network of doctors so it was basically starting over. I spent more time filling out the questionnaire of my health history than I did in the exam room.
If you have ever worked for a small business and wonder why your health plan changes from year to year, this may be why.
Additionally, between the DotCom bust and 9/11, rates had gone way, way down. My fiance had lost his contract in 2001 and spent nearly a year trying to find a new one. My major client was struggling so there was less work for me. We moved to be closer to my now-husband’s work in the suburbs and since I was much further away from my clients, I decided to start taking classes again.
We get another letter from the new insurance company about increasing our rates for 2003, not as drastically as the previous year, mind, but significant enough. We decide since we’re tight on cash, that we can forego health care for a few months or even a year or two. We figure that if we take the roughly $600 we were spending per month on premiums and tucked it away, we could be able to afford say a surgery or procedure if it were to come up in the interim. Little did we know this would cause a whole host of other issues for us later.
To be continued in Part 2: Personal Health Care Plans, Taxes and Pre-Existing Conditions