Star Tribune | March 2012
Lunchtime at Sartell Group brings on a swirl of activity. A couple of employees chop vegetables for a communal salad, while their co-workers root around the full-sized kitchen for sandwich fixings or bowls of fresh fruit and yogurt.
Each week, owner Pam Sartell stocks the pantry and fridge of the downtown Minneapolis office with healthy food and snacks to encourage her workers to eat better.
It’s more than a goodwill gesture: Sartell pays 100 percent of the medical and dental costs of all 20 employees — and their families.
“My bookkeeper says, ‘Ooh, this is kind of high, Pam,’” she said. “But I see the benefits 100 times over. I want my employees to be productive and healthy and happy.”
Software developer Sartell Group is bucking the trend. Nationally, the number of small businesses offering insurance at any level dropped last year, despite a new tax credit designed to encourage it.
While 99 percent of U.S. companies with 200 or more employees offered health insurance in 2011, just 57 percent of those with fewer than 50 workers offered benefits, according to research from the Kaiser Family Foundation.
Times are about to change for small businesses and their workers. In 2014, the Affordable Care Act will require businesses with 50 or more employees to provide insurance or give their workers money to buy it themselves on state-run exchanges.
But in certain industries, health insurance is already essential to attract good employees. That forces entrepreneurs to figure out ways to afford coverage.
Henry Bromelkamp has been providing fully paid insurance with no copays or deductibles for 33 years. He says he does it because it makes good business sense.
“People’s first reaction is, ‘Henry, that’s so generous,’” he said. “Actually, I think I’m a very good businessman and capitalist. I’m doing it to make money.”
Bromelkamp Co., with 16 employees, develops software to help nonprofits and foundations manage grants.
Bromelkamp says it’s vital to offer a competitive benefit package to attract the best job candidates.
In addition to paying all of his employees’ health insurance, Bromelkamp funds the maximum amount allowed in a Simplified Employee Pension Plan account.
In return, workers earn significantly less in wages.
“When I advertise for employment, I don’t tell people what their salary is,” Bromelkamp said. “I tell them what their compensation package is.”
The trade-off puts more money in the workers’ pockets and into the business because of reduced taxes, he said.
He tells the story of a woman who interviewed at his company four years ago and was making about $80,000. He offered her $55,000.
To ease her jitters, Bromelkamp presented a spreadsheet breaking down her current paycheck, showing that about 40 percent of her take-home pay went to pay for health insurance, 401(k) contributions, child care, Social Security, Medicare, and state and federal income taxes.
When Bromelkamp picked up the tab for health, retirement and child care, the worker moved into a lower tax bracket, avoided taxes on health care expenses and had more in her pocket despite a 30 percent pay cut.
Bromelkamp said he wins, too. He reduces payroll and the taxes tied to it — including unemployment, worker’s compensation and disability — and he can deduct the cost of health insurance.
“I don’t know why every company doesn’t do this,” Bromelkamp said. “It’s not like health care is a luxury. You can’t say to an employee ‘we can’t afford health care anymore.’ Somebody’s going to pay for it. And it might as well be in pretax dollars.”
Aside from making sure the kitchen is chockablock with breakfast food, fruit, juices (and some bite-size candy bars), Sartell encourages lunchtime walks and subsidizes health club memberships.
The focus on wellness may be paying off, she said, as premiums declined this year.
Sartell buys a small group policy through Blue Cross and Blue Shield of Minnesota. She has a mix of male and female workers, ranging in age from the 20s to 60s. Employees pay deductibles, and Sartell Group reimburses them immediately.
“I don’t want my people to have to worry about medical issues when they come up,” Sartell said.
“The costs might be higher upfront,” she said. “But I have healthier people because they go to the doctor for checkups. And I have a stable base of longtime employees. I’m not having to pay for retraining and rehiring.”
Mary Maruska, an account executive at Sartell Group for the past five years, said health care costs can add up quickly with a husband and four children, ages 5 to 15. Her previous employer covered only a portion of the costs.
“I don’t hesitate to go to the urgent care center or doctor,” she said, as she sliced avocados and cucumbers. “My kids are healthier and I take less time off. And, it leaves more money in the paycheck.”