Covering your bases

Even though it’s a part of his daily business, Terry Kelso can’t help but be aghast every time he sees the costs of health care.

The president of Associated Insurance Agencies Inc. in Westerville particularly remembers when his wife was in the emergency room of Riverside Methodist Hospital for a couple of hours for treatment of a kidney stone. The bill: $2,700, not including the doctors, medications and tests.

“I see what the premiums are,” he says, “but I see, good grief, $2,700 just to be there? You didn’t even get a cookie, you know.”

The costs make insurance premiums look like a pittance — although business owners are struggling even with those.

Kelso says small firms are highly unlikely to even have disability coverage, but they may need it most considering what would happen if the owner of a one- to three-person company were injured.

A study released this spring showed 82 percent of workers either have no long-term disability income coverage or have coverage they believe is inadequate. Fifty-nine percent of participants in the study, sponsored by the Consumer Federation of America and the American Council of Life Insurers, said they are covered either by group long-term disability income insurance or an individually purchased policy.

Kelso says for the most part, you will be limited to replacing 60 percent of your income with the insurance.

“The reason for that is you’ve got to understand the amount you’re going to receive is a totally net amount. There isn’t going to be tax or anything taken out,” he says. “So if you pay taxes and Social Security, that 60 percent is still going to put you pretty close to where you were.”

His advice regarding disability insurance:

* Be aware of variations in plans that can change your premiums.

For example, you could choose protection for a period of months, such as 24, or coverage until you turn 65. Your occupation will determine whether you’re at greater risk of being disabled — hence, higher premiums.

“You can also choose an elimination period,” Kelso says.

That’s the number of days you feel you could go without an income before the insurance kicks in.

As an example, he says a 33-year-old male who opts for a 14-day elimination period and coverage until he is age 65 would pay about $50 per month to receive $1,000 of monthly disability income. If he chose an elimination period of 90 days, he’d pay about $30 per month.

* Consider a group plan, which could save 20 to 25 percent over an individual plan.

* Follow the rules. Group coverage, Kelso warns, has a catch: In order to have it, all employees must be covered. Employees can waive coverage, but your rates will be determined based on all employees who could be covered — even family members.

* Get regular checkups.

“Periodically, I don’t think every year, but periodically, I think you need to shop the plan, because there’s newer, bigger, better things happening all the time,” Kelso says.

Like most business owners, Kelso struggles with the increasing costs of health care for his 23 employees.

His only other advice: “Stay healthy,” he says bitterly. “If you’d see some of the bills that some of these companies incur, it’s just incredible. I don’t know who to begin to blame. Doctors are obviously part of it, facilities are part of it, drug manufacturers are part of it,” he says, adding that prices are also affected by legislated mandates and recent Ohio Supreme Court decisions.

“It has been going up for about a year,” he says. “I don’t think we’ve seen anything come in (at) less than a 20 percent increase, and it’s still going strong.” How to reach: Terry Kelso, Associated Insurance Agencies Inc., 882-2335 or

Joan Slattery Wall ([email protected]) is associate editor of SBN Magazine in Columbus.