Individual and Small Group Health Insurance for the Horse Industry

By Heather Gentry, ViaQuest Financial Group, Inc.

Houston, Texas: 1-888-245-8248 or 281-798-4067

Heather Gentry is an Equimax client and a partner in ViaQuest Financial Group, Inc., which is the officially endorsed insurance agency of National Cutting Horse Association. If contract negotiations go as planned, by the end of 2006, ViaQuest will also be officially endorsed by Arabian Horse Association and National Barrel Horse Association.

Not only are standard health insurance costs high, but premiums for equine participants can be as much as 40% higher because most actuaries (people who calculate risk for insurance companies) believe that any sport or occupation associated with horses is deemed a rodeo sport or occupation. Most of us know, especially in organized competition, that this is untrue. Our horses are well broke and have seen enough wet saddle blankets that they aren't out to hurt us.  Armed with video tape and statistics, ViaQuest went to bat for equine participants and got positive responses from A- or better rated insurance companies who agreed to write health insurance without the steep rate-ups in premium linked to frequent horseback riding.

That hard work has made it easier and more economical for individuals and employers to purchase health insurance for themselves and their ranch help. But I also teach people strategies for maximizing their insurance dollars.

For individuals, a high deductible major medical plan linked to a Health Savings Account (HSA) is a way to go, especially if you need tax deductions. HSAs have been around for years, but most people don't realize the significant tax benefits associated with these accounts. They allow the insured to pay insurance premiums pre-tax, pay for out-of-pocket medical expenses pre-tax (most times with a handy debit card), and if the fund isn't used by year end it stays put and grows tax-deferred. As far as that high deductible is concerned, learn to bundle your insurance products so one covers the other. Make sure your HSA is funded by implementing an Accident Plan that pays for on or off the job accidents and a Critical Insurance policy that pays you a lump sum if you are diagnosed with a serious illness. It only sounds expensive and complicated. With an HSA, the truth is that you are in control of your premiums and your healthcare costs and you are benefiting financially from the money you are spending, not the insurance company.

For small businesses, even if you have the necessary two or more employees to insure, a group plan is not always the smartest course of action. If you have employees with age or health issues, the premiums will be astronomically high for everyone because the financial risk will be spread across the group. A small business is sometimes better off covering each employee and their family on an individual plan and creating a Flexible Spending Account (FSA) and a list bill. An FSA is an invaluable 'middle" tool for pre-taxing insurance products for owners and employees of small businesses. Just the employee, just the employer, or both may make a pre-tax contribution to an FSA and then individual policy premiums on list bill can be paid through that account. Business owners can offer plans with available benefits, such as doctor's office co-pays, before the deductible is met, keep deductibles high, which keeps monthly premiums low, and protect employee's out-of-pocket expenses by implementing an Accident Plan with each major medical policy. Most employee's are young and active, and much more likely to experience an accident than they are to have a serious illness. One type of Accident Plan (underwritten by The Hartford Companies, A+ rated) covers an individual or everyone in a family, per person, per any accidental incident on or off the job, up to $5,000 for $19.95 per month. You just can't beat this for peace of mind or soundness of pocketbook. (For those employers who cannot afford to contribute to their employees' major medical coverage, providing just the Accident Plan can be a way to show appreciation for jobs well-done.)

Employees love an arrangement where the employer is making a contribution to their FSA because it gives them the freedom of choice. An employer can say, "I am going to contribute $150 to each employee's FSA and my employees can decided how they would like to spend that money. (Remember, what an employer does for one employee, he must do for all employees. ERISA laws.) Each employee's health premium and plan could be different, since they are different ages, different health statuses, and have different degrees of family to insure. For instance, a young, single, healthy employee may choose a health insurance plan costing $98.50 per month. That doesn't spend the whole $150, so that employee may choose the Accident Plan for $19.95 and then decide he or she would like a dental plan for $20.00 per month and $11.55 worth of life insurance. That spends the entire $150 per month in a way that suits the employee's needs and makes them feel secure. A young, married employee with one child may find their health coverage costs are $202.70 per month, in which case, that employee would spend all of the employer's contribution of $150 and have to make an additional contribution of $52.70 per month just to meet major medical needs. But that same employee may also decide he or she needs life insurance to protect their spouse and child and contribute an extra $16 per month to cover those costs as well. Another employee may be covered on their spouse's plan and use the entire $150 for life, critical illness, and disability insurance. It's all about choice, which is why it's called a Flexible Spending Account!

And don't forget, when employees carry individual policies, those policies are mobile and stay in effect if the employee leaves, as long as the monthly premiums are paid. This also absolves the employer of financial responsibility for premiums, especially with supplemental insurance.

Employees may also pay monthly insurance premiums after-tax and the employer can maintain the list bill and pay it with one lump sum check.

And, as an employer, don't stop there. Find out what makes a difference to your employees. Do they need a comprehensive education on how their health benefits work? Is there a need for Critical Insurance? Do they have a spouse or children they need to protect and a Life Insurance quote is needed? It has been my experience that the more investment of time and energy you put into making your employees feel valued, the more they in turn will value their position within your organization.

If you have further questions about individual or group health insurance, please don't hesitate to contact Heather Gentry at 888-245-8248.