Small business insurance - will it become unaffordable?

In financial planning, there is a mathematical formula called “The Rule of 72.” This is a simple formula that gives you the number of years it takes to double your money. For example, if you are making 4% interest on your money and you divide that into 72, your money will double in about 18 years. If you are earning a 6% interest rate, your money will double in about 12 years. Which is all very well, but what has that got to do with health insurance?

Well if you apply the Rule of 72 to Health Insurance, things get a little interesting.  The average medical inflation trends have been 10-12% per year. If we apply the Rule of 72 to healthcare where we divide 12 into 72, every 6 years your health insurance rates could double unless you make some changes in your healthcare plans.

This means that if you are currently paying $600/mo for your health insurance, you could be paying as much or more than $1200/mo in 6 years and as much as $2400/mo in 12 years. If that isn’t scary, I am not sure what is! That is as much or more than some people’s mortgages.

The strain of healthcare costs is being felt by everyone, including employers who are being forced to cut down employee benefits. Imagine then the problems faced with trying to find affordable health insurance for a small business with only a few employees. It might be a good idea to check your level of cover with your employer and to obtain some personal insurance as well, or save some money for potential future expenses.