Entrepreneurs face insurance hurdle

Published on September 13, 2012

By Angelia Davis, The Greenville News

Being an entrepreneur has helped Clint Tucker pay off his car, his wife’s car, his motorcycle and the home he lives in. Being an entrepreneur without health insurance could cause him to lose it all.

Like other small business owners in today’s economy, Tucker dropped his health insurance coverage when he could no longer afford the cost.

In doing so, the co-owner of Piano Central on North Pleasantburg Drive said he’s not just risking the $75,000 he used to buy into the business over a decade ago.

“I’m risking everything I own. That’s what I call being an entrepreneur,” said Tucker, 63. “All it would take is a diagnosis of cancer or for me to fall over here and have a heart attack and we have nothing.”

Not everyone is willing to take that kind of a risk.

The high cost of insurance is a major deterrent for some in pursuing a desire to be their own boss, said Mark Colwell of GoHealthInsurance.com, an online portal for finding health insurance coverage nationwide.

“We find that a lot of people will stay in their bigger company positions because they have health insurance,” he said. “We’ve seen that trend all over the country.”

Frank Knapp, president of the South Carolina Small Business Chamber of Commerce, believes that will change in 2014, when new portions of the Affordable Care Act kick in.
Entrepreneurs “frozen” in their current employment will be able to leave, start a new business and have access to healthcare because insurance companies will be required to offer them insurance if they have a pre-existing health condition, Knapp said. Currently, insurance companies are’t required to market individually.

That’s been the main issue holding back many entrepreneurs from starting a business, Knapp said. They or someone in their family have a pre-existing condition and say they can’t leave because they won’t be able to get health insurance, he said. “Even if they afford the premium, they can’t get it.”

Some of the calls Knapp has received were from existing business owners asking where they could get insurance, and they’ve all had some previous health problems. “Unless you’ve got a group, you can’t get insurance if you’ve got a health problem,” he said.

“Anybody over 50, the insurance company is going to find something. Literally, any problem you’ve ever had will be a red flag to an insurance company when you go into the individual market.”

In 2014, they’ll have access to healthcare but it won’t necessarily be more affordable because they’ll be paying the full premium. Right now, they’re being subsidized by their employer, Knapp said.

Employers with fewer than 25 employees and who provide health insurance already may qualify for a tax credit of up to 35 percent (up to 25 percent for non-profits) to offset the cost of insurance, under the new law. That credit will increase in 2014 to 50 percent.

Timothy Justice, co-owner and president of Rescom Construction Co. off Garlington Road, said while health insurance costs are a large piece of his company’s budget, it’s a benefit they’ve never considered not providing for the roughly 20 employees.

“Without us providing it, it’s something that they probably could not provide for themselves because going out and trying to buy health insurance individually is almost impossible, “ Justice said.

And, he said, it’s a benefit that increases employee retention.

“Without some of the benefits we’re able to provide, you might possibly have someone wanting to jump ship to 10 cents more an hour,” he said.

The options

One of the only options available now to small business owners who can’t get health insurance with a group, Knapp said, is to buy an individual policy. He said the cost will be higher, so the entrepreneur will have to decide whether to reduce the benefits or increase the deductible or copay or both.

A business owner also can set up a Health Care Savings Account, though it’s typically for a group and not individuals.

“There are ways they can do something like that but anyway you cut it, it’s still going to be money out of pocket,” he said. “They’re still going to be paying higher premiums or more of their medical expenses before their insurance kicks in. There’s no way really around this.”
David Jackson, who recently opened a Goin’ Postal franchise in Piedmont, doesn’t have to deal with the issue of providing health insurance for employees or himself. He works alone in the storefront that offers UPS, FedEx and other postal services.

As for health coverage, Jackson said he now uses what he had when he retired after 36 years at Michelin.

“Compared to what I was paying when I worked there, it probably won’t be quite as good, but it has all the same facilities that I had access to,” Jackson said.

Bill Gantt, chief executive officer of Benefits Controls in Greenville, said Blue Cross Blue Shield of South Carolina, through the state Chamber of Commerce, offers health insurance coverage to members of chambers in the state, including Greenville.

Also, some professional associations (CPAs, homebuilders, etc.) offer health insurance coverage through their groups, he said.

Some entrepreneurs are fortunate to get coverage through a spouse’s employer. Those who can’t, can “piece together” supplemental or indemnity plans.

“Anything would be helpful,” Knapp said, “but in cases of a major health issue, they’re not going to be sufficient.”

Others opt to drop coverage, which Knapp said they can do “if they want to roll the dice.” Healthcare costs are the biggest cause of bankruptcies, Knapp said. Going without coverage is “a risk.”

Spiraling costs

Had Clint Tucker known he’d be facing such risks, he would’ve used his secondary education degree from Clemson University to teach history.

Instead, he said, the path he chose has given him an experience with healthcare costs unlike anything he’s ever experienced.

Tucker said after he and a high school friend bought the former Farr Music House, his insurance costs began to spiral upward.

Both he and his wife, who stopped working when their second child was born 32 years ago, had previous health problems. She has had arthritis. He has seen a neurologist for neck problems.

Insurance companies, he said, excluded those problems in coverage but began to raise the costs of their premiums. When the premium got as high as $1,000 a month and the deductible reached $6,700, “I had to drop it,” Tucker said.

It didn’t help that the recession hit and his business was selling pianos — an item that “people can live without,” he said. The economy and sales at the store are better, but now the industry has changed.

Parents who used to come in and buy pianos are instead going to big-box retailers and buying keyboards, taking away entry-level business from Piano Central. The city that used to have seven piano stores now has two.

Today, Tucker and his wife of 40 years put money from his salary into a debit-card account and use it only when they need to get their teeth cleaned and for wellness check-ups. They have no catastrophic coverage to fall back on.

They eat three meals a day, exercise by walking together, and take care of themselves.
“We’re trying to maintain, he said. “We don’t want to be the kind of people who neglect our health and later on have an emergency.”

Turner said hospitals’ purchase of private healthcare offices has made it difficult for people like him to pay for procedures out of pocket to shop around for lower prices.

And, he said, since he doesn’t have insurance, “I’ve somehow changed from a guy who pays his bill” at a doctor’s office he’s been going to for 40 years “to somebody who’s questionable because I don’t have insurance.”

“This horror story is nothing compared to the ones who’ve really gone through with a disease or been denied treatment or didn’t get the treatment they deserve because they don’t have insurance,” Tucker said. “People have died from it, so I shouldn’t complain. It’s just that I’m scared. I’m cognizant of the fact that I’m one heartbeat away from not owning anything.”

Stress-free zone

At one time, business owner Katy Watts toyed with the idea of taking a job elsewhere just for the insurance coverage. But the 59-year-old co-owner of Nyla Beans gift shop prefers to work for herself.

Thinking about it causes stress, creating a need for the health insurance she doesn’t have, said the widow, mother and breast cancer survivor.

“Stress is one of the hardest things on you. So when stressful things happen, I put them in another place,” she said. You won’t find them in her store, where only cheerful handmade clothes, scarves and other gift items reside.

Like Tucker, Watts and her daughter, Sara, a single mother who co-owns the store, both had pre-existing health conditions that have made health insurance unaffordable.

They have a kind of gap insurance for coverage of something accidental, Watt said. It will pay them up to $100 a day if they have to go to the hospital and for at least one preventive test.
But without a normal medical policy, Watts, who has been cancer-free for 10 years, admits she’s probably not getting the check-ups she should have.

Instead, she focuses on eating right, taking care of herself, and “staying in tune with what’s going on with me.”

“It’s the best way I know how to stay healthy,” she said.

Original Article: http://www.greenvilleonline.com/article/20120913/BUSINESS02/309130017/Entrepreneurs-face-insurance-hurdle

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