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Running for Cover

Should you eliminate health coverage entirely or limit it to a few key employees?

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This story appears in the July 2006 issue of Entrepreneur. Subscribe »

If you're asking yourself this question, you're not alone. The percentage of small businesses offering health insurance fell from 69 percent in 2000 to 60 percent in 2005, according to a September 2005 Kaiser Family Foundation/Health Research and Educational Trust survey. Companies cited high premiums and workers' access to other coverage as reasons to nix coverage.

But is it better to eliminate coverage for everybody, or keep it for a few? Either way, bruised morale could become an issue: Workers still rate health insurance as the most important benefit, according to a 2005 study by Employee Benefit Research Institute, a nonpartisan Washington, DC, group that researches benefit programs. "If you've got talent you want to keep, [eliminating coverage] may not be the best strategy," says Nan Andrews Amish, founder of Big Picture Healthcare, an El Granada, California, health-care consulting firm. "Employees care about health insurance."

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