Iowa Group Offers Health Care to Self-employed Entrepreneurs

With the rapidly rising cost of health insurance, entrepreneurs frequently find themselves unable to pay their premium in the early stages of business ownership. Often, this means going without health insurance or abandoning plans to launch a new firm. The North Central Iowa Alliance (NCIA) has announced a new initiative to lower this barrier facing new business owners. The Helping Entrepreneurs Launch Program at North Central Iowa (HELP @ NCI) will make health insurance available to qualified entrepreneurs in the region during the first three years of their business' existence.

 

The program will be launched in partnership with the North Iowa Area Community College John Pappajohn Entrepreneurial Center, which will offer a regional feeder system for HELP @ NCI along with its other services for entrepreneurs. Though the program is offered at no cost to participants, business owners will be made aware of the expenses so that they can incorporate health insurance into the business planning.

 

HELP @ NCI will be funded through a $50,000 grant from the Iowa Department of Economic Development and through $15,000 in matching funds raised by NCIA. The alliance expects this funding to provide assistance for 12 or more new business owners per year, at a monthly cost of $350. Entrepreneurs will be able to apply for the programs though local economic development organizations and the North Iowa Area Community College.

 

A survey conducted in 2006 by the National Association for the Self-Employed found that 57 percent of micro-business owners have had to do without health care coverage at some point. Most of those respondents cited cost as their primary reason for not having insurance. An earlier survey revealed that the burden of health care costs can be much higher for entrepreneurs and small businesses. In 2005, small firms spent nearly 20 percent of the gross sales on heath care, while companies with an annual revenue over $500,000 spent only 2.3 percent. The Kaiser Family Foundation reports that insurance premiums for small companies rose an average of 8.8 percent last year, while larger companies with 200 or more employees saw an increase of only 7 percent.



A separate study published last year by Dr. Tami Gurly-Calvez of the U.S. Small Business Administration's Office of Advocacy, entitled Health Insurance Deductibility and Entrepreneurial Survival, reported that the federal income tax health insurance premium deduction for the self-employed played a significant role in improving an entrepreneur's odds of success. This is particularly true for married entrepreneurs. Dr. Gurly-Calvez found that the presence of any deduction for health insurance costs reduced the probability of an exit by more than 10 percent for single filers and by almost 65 percent for married filers. Somewhat surprisingly, the study also reported that larger deductions did more to decrease the exit rate for single entrepreneurs than for married entrepreneurs.

 

Read the press release from the North Central Iowa Alliance at: http://www.northcentraliowa.net/docs/HELP%20press%20release.pdf