Bargaining on the Policy Price

Once you've selected a company or agent that you'd like to go with, you may want to see what you can do about reducing the price you've been quoted. Here are a few tactics that you can employ to get the price down:

• If it's not stated in the proposal, see if you can find out how much profit is built into the quote and see if you can bargain to cut that down. It's tough to get people to give you straight information on this touchy area, but it's also an area where the agent/company has room to maneuver.
• Check the cost of each coverage. Perhaps raising the copayment on a given service can shave some dollars off the cost.
• See if the agent is willing to extend the term of the policy to two years. Sometimes the underwriters will give you a break if they can keep your business for a longer period of time.
• Try extending waiting periods for new employees. Going from 30 days to 60 days or to six months can trim the costs slightly in some cases.
• As a last resort, try eliminating coverage that you think will not be used often.

These tactics may be more effective with businesses with more than a few employees under the policy. If you only have two or three employees, you may not have much choice but to pay what is quoted.

Warning If you get a really good proposal from a company that offers coverage that's competitive with other plans you've looked at but the price is way below what others have quoted you for the same coverage, you may be getting "low-balled." Low-balling is a tactic used by some insurance companies and agents to get your business. They will give you an artificially low price just to get your business. It may sound like a good deal, but when you go to renew the policy next year, the price will soar, possibly forcing you to go through the whole process of finding a vendor all over again. Or, in order to avoid that, you may end up paying a lot more than you would have, had you not taken the low bid in the first place. Just like most things, if it sounds too good to be true, it probably is.

Health care reform. Beginning in 2014, the Patient Protection and Affordable Care Act and related legislation will enable small businesses to purchase private health insurance through a state-based insurance exchange program specifically designed for them. The Small Business Health Options Program (SHOP) aims to allow small employers an affordable way to offer employees a variety of health plans.

In addition, under the Patient Protection and Affordable Care Act, insurance companies are required to spend 80 to 85 percent of premium dollars on medical care and health care quality improvement rather than administrative costs. If they don't, the insurance companies will be required to provide a rebate to their customers beginning in 2012. The intent of this provision is to make the insurance marketplace more transparent and make it easier for consumers to purchase plans that provide better value for their money. Detailed information on the requirements of the "medical loss ratio" provision is available on the government health care website.