BusinessTN

Steve Nicola's home entertainment company, Smarthomes Chattanooga, has been steadily growing for the past six years. As he took on more personnel, Nicola realized that he also needed to offer his employees more.

"I wanted to take care of my people and offer health care benefits," Nicola says, "but when I shopped around for insurance packages, it just seemed like an awfully big expense."

The high cost of insurance in today's market makes it difficult for most small businesses to offer coverage. In fact, Jim Brown, Tennessee director of the National Federation of Independent Businesses (NFIB), says 52% of small business startups don't offer health insurance. But before throwing in the towel, small business owners might consider a few options that fall somewhere in between paying for an expensive package and making employees go without.

When shopping for health insurance, it can be a boon to have a larger company on your side. Professional employment organizations (PEOs), which handle bookkeeping, workers' compensation and taxes for companies, may also offer sage insurance advice and a little negotiating clout on rates (if the PEO itself doesn't offer insurance). Tonya Jones, whose Mark IV contracting company in Nashville has been relying on PEOs for more than 20 years, says they ease the burden of finding a good package.

"I don't feel like I'm all alone," Jones says. "Small companies usually have to take what they're given, and you don't have any ability to make decisions for yourself."

Jones says PEOs can also handle the paperwork for a Section 125 Cafeteria Plan, which lets businesses deposit a tax-free portion of an employee's paycheck into an account that he or she can use to buy everything from eyeglasses to prescription drugs to health insurance. (Money not used at the end of the year is lost.) The paperwork needed to administer the program is time-consuming, but Jones insists that it's worth it if you have a PEO to shoulder the burden.