It’s funny, how products sometimes blow up out of nowhere. I’ve carried novelty golf balls since the beginning. A few months back somebody bought enough Halloween balls to propel that style onto the bestseller list (they do sell year-round). This week a blogger in Italy picked up on them (see the 29 Ottobre 2009 post). I can’t read Italian, but I do know that her link works. Links are good. Creating product links is part of this blog's reason for existing. Even if none of her readers buy anything from me, that link will raise the page’s stature in the all-seeing eyes of Google. Halloween is over, so that should be the end of it…but who knows where it will really go from there?
I’ve explained that I don’t particularly like international sales. I lose money on the currency conversion, the charge processing cost is higher, the shipments take considerable time to prepare, and I am supposed to hand the parcels to a postal employee, which means either scheduling a carrier pickup or (shudder) standing in line. Last week I stood in line with a package to Denmark and one to Canada among my domestic shipments. One clerk was working the counter while three others bustled around officiously. The working clerk was tied up with an old woman who apparently had set aside her whole afternoon for the post office. Eventually a manager-type came out and started trying to steer people toward the automated postal center. He couldn't take my international packages, though – those had to be handed to a counter clerk, he said, and he couldn’t hand them off for me. :rolleyes: OK, whatever. Finally I made it to the front. The clerk took my packages, and then told me that he couldn’t scan in labels purchased online because those are already “accepted”, technically. From now on, I’m going with carrier pickup, even though it adds an extra day.
Which brings up a new reason to hate both Canada and UPS – a twofer! A customer paid $39.98 for two sets of Whisky Stones – which is to say, rocks. Postage to Canada was $16.15, bringing it to $56.13. Converting to Canadian funds made that $60.76. And then Canadian Customs hit him for $36.49 in import duties. Bottom line: $97.25 for 18 pieces of rock. They’re nice rocks, but wow.
I strengthened my international shipping wording. Truth is that this seems to happen to everyone who chooses UPS Standard to Canada. USPS shipments are less likely to be intercepted. I don’t know whether that’s Canada’s fault or UPS’s, and so I shall hate them equally this week.
**************
I went back to manual click bids after seeing some weird money allocations from Google’s conversion optimizer. I only had the nerve to stick with it for four days. My daily spend rose by about $4 per day. On three of those days I got the usual 50-75 clicks. On the last day I got 83 – a little better than average. I did make three international sales during the period, which is also more than average…but that’s hardly desirable. I think I’d have to run this for at least a month to draw any conclusions, and that’s a more expensive experiment than I care to perform. Maybe I’ll try it again during the slow season. Or maybe not. I don’t really like surrendering control.
October was a phenomenal month. I wish that the changeover from 2-LED to 3-LED lighted caps could go on forever. Sadly, the old ones are selling out, and that’s going to take some wind out of November’s sails.
Of course it all comes down to November and December, but here’s what it looks like going in. Remember, this year’s plan is +25% growth (reduced from 33% when the economy collapsed).
For October:
Total income: +58.0%
Total COGS: +61.2%
Payroll: +232.5%
Net Income (Profit): -50.1%
The YTD numbers:
Total income: +24.2%
Total COGS: +21%
Payroll: +44.2%
Net Income (Profit): -37.4%
I continue to steer more money into my paycheck at the expense of my year-end profit -- not the optimal tax strategy, but I need every penny while Anne is unemployed. COGS is rising more slowly than income. And income is very near my 25% growth target. Pretty good numbers all around.
The next two months will decide next year’s plan. Tentatively, I’ve set it at 30% growth, but I might lower that if Christmas is a bust.
Welcome to Curious Business
Every Friday, I post a small insight into running Curio City and/or Blue Hills Editorial Services. My most recent posts are directly below. You can also start with the first post, or use the subject labels to the right to home in on particular topics. Feel free to comment on anything that interests you.
Friday, October 30, 2009
Friday, October 23, 2009
Paper Poverty
I first looked into the Medical Security Program (see last week’s post) right after Anne was laid off. Our income during their six-month lookback was too high then. Now it’s eight months later. Our COBRA subsidy is expiring, I’ve ruled out Commonwealth Care as a lifeline, and Anne’s January employment income no longer counts. The MSP is nearly out of money; I need to try for a piece of it before it dries up.
It’s going to be tight, but we’re pretty close to the state’s income cap (4x the poverty line). That's the sweet spot that everyone wants in this economy: Poor enough to tap some of the vast pools of government money sloshing around, but not so poor as to be seriously deprived. As soon as Anne fills in a couple of blanks and exhumes some documentation, I can mail in the application. I’m nervous about showing them exactly how much freelance income she’s earned, but we have honestly reported it and forfeited unemployment checks every time she bills a client. I do not intend to deceive or cheat anyone.
While I was researching all of this I learned that only businesses with six or more employees are subject to the unemployment tax that funds the MSP. Kraken Enterprises will be spared next year’s 40% increase in that tax, so I can afford to raise my payroll percentage from 18.75 to 19% (incidentally paying a smidgeon more in employment taxes, too). That’s right: effectively immediately, I’m giving myself another tiny raise! It diverts roughly $150 a year from my profits to my paychecks -- three bucks a week, woohoo!. It also takes me a small step closer to my long-time goal of devoting 20% of sales to payroll (I started at 15%, IIRC).
In semi-related personal news, Anne finally straightened out a medical billing error from last November. Everybody’s paid off, all of our copays and deductibles are met, and the bill collectors have stopped harassing us. Remember the story I told you about Blue Cross paying 85 cents of a $270.85 bill? Well, Anne shamed them into waiving the deductible even though we really did owe it. That’s right; she appealed for mercy on humanitarian grounds and won! How astonishing is that?
Curio City’s sales drooped early this week. As an experiment, I’m letting Google’s automatic “conversion optimizer” override my manual keyword bids. Their algorithm sets per-click bids based on my historical cost per conversion and each keyword’s conversion percentage -- basically replacing my intuition with their formula. Of course it’s designed to maximize Google’s revenue, so I’m watching costs closely. My daily spend has indeed risen. The jury is out on whether sales will go up commensurately. I'll reserve judgment for a week.
Now it's time to violate my open-to-buy budget for Christmas inventory. I’m already $350 in the red. I have three big new-product orders that I'd like to place ASAP and another huge one coming up in mid November; this is beyond routine reorders. I’ve said before that I’m more of a manager than an entrepreneur -- I’m most comfortable following budgets and keeping numbers in the black. But to succeed I need to break out of my comfort zone. It’s time to place bets on holiday hits, use the credit card float, and hope that new products start selling before the bills potentially expose me to usurious credit card interest rates. This high-stakes juggling would be fun if my own money weren’t on the line.
It’s going to be tight, but we’re pretty close to the state’s income cap (4x the poverty line). That's the sweet spot that everyone wants in this economy: Poor enough to tap some of the vast pools of government money sloshing around, but not so poor as to be seriously deprived. As soon as Anne fills in a couple of blanks and exhumes some documentation, I can mail in the application. I’m nervous about showing them exactly how much freelance income she’s earned, but we have honestly reported it and forfeited unemployment checks every time she bills a client. I do not intend to deceive or cheat anyone.
While I was researching all of this I learned that only businesses with six or more employees are subject to the unemployment tax that funds the MSP. Kraken Enterprises will be spared next year’s 40% increase in that tax, so I can afford to raise my payroll percentage from 18.75 to 19% (incidentally paying a smidgeon more in employment taxes, too). That’s right: effectively immediately, I’m giving myself another tiny raise! It diverts roughly $150 a year from my profits to my paychecks -- three bucks a week, woohoo!. It also takes me a small step closer to my long-time goal of devoting 20% of sales to payroll (I started at 15%, IIRC).
In semi-related personal news, Anne finally straightened out a medical billing error from last November. Everybody’s paid off, all of our copays and deductibles are met, and the bill collectors have stopped harassing us. Remember the story I told you about Blue Cross paying 85 cents of a $270.85 bill? Well, Anne shamed them into waiving the deductible even though we really did owe it. That’s right; she appealed for mercy on humanitarian grounds and won! How astonishing is that?
Curio City’s sales drooped early this week. As an experiment, I’m letting Google’s automatic “conversion optimizer” override my manual keyword bids. Their algorithm sets per-click bids based on my historical cost per conversion and each keyword’s conversion percentage -- basically replacing my intuition with their formula. Of course it’s designed to maximize Google’s revenue, so I’m watching costs closely. My daily spend has indeed risen. The jury is out on whether sales will go up commensurately. I'll reserve judgment for a week.
Now it's time to violate my open-to-buy budget for Christmas inventory. I’m already $350 in the red. I have three big new-product orders that I'd like to place ASAP and another huge one coming up in mid November; this is beyond routine reorders. I’ve said before that I’m more of a manager than an entrepreneur -- I’m most comfortable following budgets and keeping numbers in the black. But to succeed I need to break out of my comfort zone. It’s time to place bets on holiday hits, use the credit card float, and hope that new products start selling before the bills potentially expose me to usurious credit card interest rates. This high-stakes juggling would be fun if my own money weren’t on the line.
Friday, October 16, 2009
You Can Go Crazy Being Public Spirited
I needed to write a Whisky Stones ad for Google AdWords. I came up with:
“Chill your wine or spirits without
ruining the flavor with melting ice”
The “without…with” construction offends my inner grammarian, but it fits the template. Except that Google forbids the word “spirits.” I placated the software by changing “spirits” to “liquor” (apparently less objectionable). Yet, they approved the ad that I'd written just minutes before:
“Whiskey Stones are soapstone cubes
To cool your spirits without water”
Go figure. Maybe "wine and spirits" was the formulation that got their panties in a bunch.
I’ve never been able to advertise the Crazy Clock on Google, either, because “crazy” is a forbidden word. I wonder if I could rechristen the product "Insane Clock".
Incidentally, Whiskey Stones are going to be a hit this Christmas. I’ve sold 3 out of 12 in the first week. One of my customers suggested the product some months ago.
Health Insurance: The Topic That Makes Me Sick
Our coverage downgrade finally went through. Yay! Our premium fell from $924 to $770 per month, which is below any retail price that I’ve seen anywhere, including the Mass. Connector. With a higher deductible and copays and lower reimbursements, we can’t afford to actually see our doctor or fill our prescriptions…but we couldn’t afford to use our earlier plan, either, so the $150/month saved up front trumps the out-of-pocket expenses that we can’t pay in either case. We’d have to cut our coverage to near-nothing and give up our doctor to save any more money.
Two potential game-changers remain: (1) Congress looks increasingly likely to renew the federal COBRA subsidy that’s kept us going for the past nine months; and (2) today’s Boston Globe says that the state’s Medical Security Program for laid-off workers is nearly out of money. This state equivalent to the COBRA subsidy -- separate from the Commonwealth Care that I explored earlier – is news to me. From what this story says, it could reduce our insurance costs to nearly nothing, if I can get in. Here’s the money quote:
Why, that would be us! I obviously need to investigate that this afternoon. Of course, what’s good for workers is bad for employers:
Crap. I was planning to raise my payroll percentage by another quarter-point next month, but not if my unemployment tax bill is going up by 40%. I wonder if falling unemployment will eventually trigger an automatic decrease. Hah!
At the risk of turning this blog into a soap opera about my personal life, I’ll run with the tangent. My wife’s unemployment checks were interrupted when she exhausted her initial 26 weeks. Next week we’ll get a token check for the 27th week of partial benefits that Massachusetts adds automatically. Then a 50-week federal extension kicks in. Obama is talking about tacking 26 more weeks onto that. Thanks to that interrupted unemployment checks and the expiring COBRA subsidy, October’s budget is perilous. But it looks like we’ll have an income floor for almost a year after that, and perhaps even longer. Maybe the moribund journalism/publishing job market will revive by then.
Did you know that there are 6.7 unemployed Americans for every job opening? That’s the worst ratio since they started keeping track, and it doesn’t include the underemployed or those who are trapped in bad jobs. Most of those job openings are in highly skilled, specialized areas like health care and biotech. The ratio of unemployed writers to available publishing jobs would be a frightening number indeed.
OK, back to Curious Business: Sales are still booming and Curio City is generating much larger paychecks than expected. Today's pay works out to $6.61 per hour based on two 40-hour weeks, or $7.56/hr using the 35-hour weeks that I really work. That’s very near my longstanding goal of earning minimum wage (currently $8.00 in Massachusetts and $7.25 in the hinterlands). Ordinarily I only see those big bucks for three weeks in December.
Generating a substantial paycheck from my own business, without an employer, feels really good. Kraken Enterprises could still fail, but I can't be laid off! The sales surge that I’ve enjoyed for the past month depends almost entirely on the phase-out of Panther Vision’s 2-LED caps. Once those are gone, things will drop back to normal. But since “normal” is now getting into Christmas-normal, I can expect a non-trivial income for the rest of this year.
“Chill your wine or spirits without
ruining the flavor with melting ice”
The “without…with” construction offends my inner grammarian, but it fits the template. Except that Google forbids the word “spirits.” I placated the software by changing “spirits” to “liquor” (apparently less objectionable). Yet, they approved the ad that I'd written just minutes before:
“Whiskey Stones are soapstone cubes
To cool your spirits without water”
Go figure. Maybe "wine and spirits" was the formulation that got their panties in a bunch.
I’ve never been able to advertise the Crazy Clock on Google, either, because “crazy” is a forbidden word. I wonder if I could rechristen the product "Insane Clock".
Incidentally, Whiskey Stones are going to be a hit this Christmas. I’ve sold 3 out of 12 in the first week. One of my customers suggested the product some months ago.
Health Insurance: The Topic That Makes Me Sick
Our coverage downgrade finally went through. Yay! Our premium fell from $924 to $770 per month, which is below any retail price that I’ve seen anywhere, including the Mass. Connector. With a higher deductible and copays and lower reimbursements, we can’t afford to actually see our doctor or fill our prescriptions…but we couldn’t afford to use our earlier plan, either, so the $150/month saved up front trumps the out-of-pocket expenses that we can’t pay in either case. We’d have to cut our coverage to near-nothing and give up our doctor to save any more money.
Two potential game-changers remain: (1) Congress looks increasingly likely to renew the federal COBRA subsidy that’s kept us going for the past nine months; and (2) today’s Boston Globe says that the state’s Medical Security Program for laid-off workers is nearly out of money. This state equivalent to the COBRA subsidy -- separate from the Commonwealth Care that I explored earlier – is news to me. From what this story says, it could reduce our insurance costs to nearly nothing, if I can get in. Here’s the money quote:
The health insurance program, which is funded solely by a tax on employers, helps middle-income people who make too much money to qualify for Medicaid and other state-subsidized health care programs designed for the poor. Since January, enrollment in the program has doubled, the state said, to roughly 34,000 people.
Traditionally, the state program has paid 80 percent of a laid-off worker’s monthly health insurance premium for as long as the worker is collecting unemployment benefits. But the federal government designated stimulus money earlier this year to reimburse some of the health insurance costs of the unemployed, so most recipients are now paying about 9 percent of their monthly premiums.
Why, that would be us! I obviously need to investigate that this afternoon. Of course, what’s good for workers is bad for employers:
The unrelenting rise in unemployment will also trigger an automatic 40 percent increase in the tax businesses are required to contribute for unemployment benefits. In January, the tax will increase from an average of $594 per employee to $832.
Crap. I was planning to raise my payroll percentage by another quarter-point next month, but not if my unemployment tax bill is going up by 40%. I wonder if falling unemployment will eventually trigger an automatic decrease. Hah!
At the risk of turning this blog into a soap opera about my personal life, I’ll run with the tangent. My wife’s unemployment checks were interrupted when she exhausted her initial 26 weeks. Next week we’ll get a token check for the 27th week of partial benefits that Massachusetts adds automatically. Then a 50-week federal extension kicks in. Obama is talking about tacking 26 more weeks onto that. Thanks to that interrupted unemployment checks and the expiring COBRA subsidy, October’s budget is perilous. But it looks like we’ll have an income floor for almost a year after that, and perhaps even longer. Maybe the moribund journalism/publishing job market will revive by then.
Did you know that there are 6.7 unemployed Americans for every job opening? That’s the worst ratio since they started keeping track, and it doesn’t include the underemployed or those who are trapped in bad jobs. Most of those job openings are in highly skilled, specialized areas like health care and biotech. The ratio of unemployed writers to available publishing jobs would be a frightening number indeed.
OK, back to Curious Business: Sales are still booming and Curio City is generating much larger paychecks than expected. Today's pay works out to $6.61 per hour based on two 40-hour weeks, or $7.56/hr using the 35-hour weeks that I really work. That’s very near my longstanding goal of earning minimum wage (currently $8.00 in Massachusetts and $7.25 in the hinterlands). Ordinarily I only see those big bucks for three weeks in December.
Generating a substantial paycheck from my own business, without an employer, feels really good. Kraken Enterprises could still fail, but I can't be laid off! The sales surge that I’ve enjoyed for the past month depends almost entirely on the phase-out of Panther Vision’s 2-LED caps. Once those are gone, things will drop back to normal. But since “normal” is now getting into Christmas-normal, I can expect a non-trivial income for the rest of this year.
Friday, October 09, 2009
Christmas in October
I blew off the health insurance quest this week. Business is booming and I couldn’t waste time on a pointless pursuit. Maybe I’ll come back to it next week if the pace dies down.
After Christmas, when my Kraken Enterprises paychecks fall back to nothing, I’m going to have to look for a job with health insurance. If I can’t find work with benefits – I've been out of the conventional workforce for over five years and the job market isn't exactly promising -- I might still try to pick up a few hours a week doing something menial to supplement my meager business income. With the COBRA subsidy gone our household budget has tipped into major, chronic deficit.
I haven’t eviscerated our budget yet pending two rays of hope: Obama has talked to Congressional leaders about extending unemployment benefits and “the COBRA tax credit”, by which I hope they mean the COBRA subsidy. That would keep us afloat for another six or nine months. And, my wife got a strong tip on an excellent potential job today. She’s well qualified and two of her references work for the company, but competition will be brutal. Do you know how many journalists are out of work these days? Catching either one of these breaks really would be like Christmas in October.
Wait. Back up. Did I say business is booming? Yeah, let’s talk about that….
First, I raised my 25-cent-per-click ceiling to 30 cents and increased my daily spending limit at Google AdWords. I’ve also been chipping away at a radical overhaul of Yahoo Search Marketing, which I will use through the Christmas season. Spending more on advertising has (so far) come with a proportional increase in sales. I’m unsure how strong the cause/effect relationship is.
Second, Christmas started in September this year. I am looking forward to a good holiday season. At this time last year, the economy was just starting its freefall. This year, it’s just starting to claw its way back up.
Third, and biggest of all, is the Panther Vision product changeover. The old 2-LED caps are blowing out of here at two bucks off; America loves a bargain. The new 3-LED caps are starting to move, if unspectacularly. This situation can only last as long as Panther’s inventory of old caps does, and the most popular colors are already extinct. I had to delay my reorder for several valuable days while I waited for a customer to make up his mind about a potential large purchase. I phoned in my order this morning (driving my open-to-buy back into deep red ink) as soon as he told me that he’s deferring his decision until next week. But I was too late to beat the three-day weekend. Curse you, Columbus Day!
After Christmas, when my Kraken Enterprises paychecks fall back to nothing, I’m going to have to look for a job with health insurance. If I can’t find work with benefits – I've been out of the conventional workforce for over five years and the job market isn't exactly promising -- I might still try to pick up a few hours a week doing something menial to supplement my meager business income. With the COBRA subsidy gone our household budget has tipped into major, chronic deficit.
I haven’t eviscerated our budget yet pending two rays of hope: Obama has talked to Congressional leaders about extending unemployment benefits and “the COBRA tax credit”, by which I hope they mean the COBRA subsidy. That would keep us afloat for another six or nine months. And, my wife got a strong tip on an excellent potential job today. She’s well qualified and two of her references work for the company, but competition will be brutal. Do you know how many journalists are out of work these days? Catching either one of these breaks really would be like Christmas in October.
Wait. Back up. Did I say business is booming? Yeah, let’s talk about that….
First, I raised my 25-cent-per-click ceiling to 30 cents and increased my daily spending limit at Google AdWords. I’ve also been chipping away at a radical overhaul of Yahoo Search Marketing, which I will use through the Christmas season. Spending more on advertising has (so far) come with a proportional increase in sales. I’m unsure how strong the cause/effect relationship is.
Second, Christmas started in September this year. I am looking forward to a good holiday season. At this time last year, the economy was just starting its freefall. This year, it’s just starting to claw its way back up.
Third, and biggest of all, is the Panther Vision product changeover. The old 2-LED caps are blowing out of here at two bucks off; America loves a bargain. The new 3-LED caps are starting to move, if unspectacularly. This situation can only last as long as Panther’s inventory of old caps does, and the most popular colors are already extinct. I had to delay my reorder for several valuable days while I waited for a customer to make up his mind about a potential large purchase. I phoned in my order this morning (driving my open-to-buy back into deep red ink) as soon as he told me that he’s deferring his decision until next week. But I was too late to beat the three-day weekend. Curse you, Columbus Day!
Friday, October 02, 2009
A Fistful of Failures
I gritted my teeth and wasted six hours this week trying to beat the health insurance system.
Commonwealth Care’s online worksheet makes it official: We legally can’t afford health insurance. The state figures that we should be able to pay about $500 a month for insurance, and there’s nothing available that cheap. Massachusetts will graciously exempt us from being fined if we choose not to buy insurance, but they won’t help us pay because we make more than three times the poverty rate. Although it's nice to know that it's legal, going uninsured is a last resort. FAIL
Commonwealth Choice is the state’s insurance clearinghouse. Their website offered 21 plans ranging in price from $732 to $2,071 per month. We currently pay about $925 for Blue Cross Blue Shield of California. A comparable BCBS plan through Commonwealth Choice is $1,112 – about what we’ll pay for our current plan after COBRA expires. The only option that really saves us any money is the $732 Neighborhood Health Plan. It carries a $2,000/$4,000 deductible (vs. our current $500 deductible)...and our doctor doesn’t accept it. Changing doctors is a nonstarter. FAIL
All righty then, what about getting a group rate through some club or association?
Sadly, AARP group insurance (via Aetna) is still not available in Massachusetts. FAIL
AAA offers dental, life, homeowners, auto, long-term care, accident, and travel medical…but no general medical insurance. FAIL
The American Society of Journalists & Authors has nothing for Massachusetts. FAIL
Anne doesn’t qualify for membership in the Author’s Guild. FAIL
The Editorial Freelancers Association has nothing at all. FAIL
Health Service Administrators (HSAmembership.com, formerly the Mass. Business Council) is wicked confusing. All I could find were a bunch of links to insurance company websites with no information about pricing. I need to spend a couple more hours examining all of those links. Provisional FAIL.
The cheapest Fallon Community Health Plan that our doctor accepts is $942/mo with a $2,000 deductible. It does include dental, which we currently lack, so in that way it’s better than our current BCBS plan. FAIL for now, but I might come back to this one after COBRA runs out.
Various online quote finders are really just trolling for my phone number -- they don’t really show quotes online. The two agents who tried to sell me cut-rate coverage were both peddling Mid-West National Life, which Google tells me is the object of numerous complaints and lawsuits. FAIL. We already have enough problems with Blue Cross. (In fact, the next item on today’s agenda after posting this essay is calling a collection agency that’s dunning me over a wrongly-denied medical bill).
Speaking of problems with Blue Cross, here’s a funny story: South Shore Hospital billed BCBS $691 for an X-ray that Anne needed. The hospital settled for the $270.85 that BCBS said was the covered amount. But they raised our deductible last month from $250 to $500, and there was a $20 copay. Bottom line? BCBS paid 85 cents. We got billed for $270.
For this, we pay $925 a month?
CONCLUSION: It is difficult to get a group health insurance rate and impossible to get a subsidy without either having a job or being truly impoverished. Unemployed individuals have no alternatives to paying retail, and Massachusetts has the highest health insurance costs in the US.
So I’m going to have to be creative.
Kraken Enterprises could establish a Section 125 Voluntary Plan and designate Commonwealth Choice as an available health insurance option. (A Voluntary Plan is one to which the employer does not contribute.) I’d then set up an account with the Health Connector (which represents six carriers). My employees – i.e., me – can then enroll in a Commonwealth Choice plan through the Health Connector. Kraken Enterprises would collect my insurance payments via payroll deduction on a pre-tax basis. Kraken is then billed for my health insurance premium on the 15th of every month. Any shortfall is the responsibility of the employee – i.e., me.
The monthly insurance premium is triple my gross monthly salary, so payroll withholding is a joke. But wait. What if Anne’s freelance business became a Kraken enterprise? She’d become an employee of my company and her revenues would filter through my corporate accounting. The accounting would be a nightmare – I’d need to manage a separate operating company. I would need to consult my CPA and probably a lawyer as well. It would certainly complicate our already-Byzantine tax situation. After all of that, I have no idea whether this would actually save us any money. As far as I can tell, the only advantage is paying in pre-tax dollars. I’d need to actually create the Section 125 thingie and get an employer number before I can see the employee pricing – I assume it would offer me the same 21 plans that I saw as an individual, and probably at the same prices. Although I'm reluctant to draw the state's attention, maybe I’ll do that next week.
Having two employees would magically qualify Kraken Enterprises to purchase group-rate insurance outside of the Commonwealth Choice umbrella. (The insurance industry defines a “small business” as 2-19 employees). Creating this legal fiction might get us around the assumptions that are limiting us to individual/family coverage. However, being married might screw that up. Insurers want two potential enrollees. I wonder how we’d make out if we got divorced and bought two individual plans? We are both willing to divorce if it will save us enough money on health insurance.
Next week I should spend a few more hours on this:
Incidentally, it does not appear that federal healthcare reform is going to help us. The plan that's taking shape cuts off subsidies at double the poverty rate.
The only thing that would save our bacon now is if Congress extends the COBRA subsidy for another nine months. AFAIK, that has not even been proposed.
Commonwealth Care’s online worksheet makes it official: We legally can’t afford health insurance. The state figures that we should be able to pay about $500 a month for insurance, and there’s nothing available that cheap. Massachusetts will graciously exempt us from being fined if we choose not to buy insurance, but they won’t help us pay because we make more than three times the poverty rate. Although it's nice to know that it's legal, going uninsured is a last resort. FAIL
Commonwealth Choice is the state’s insurance clearinghouse. Their website offered 21 plans ranging in price from $732 to $2,071 per month. We currently pay about $925 for Blue Cross Blue Shield of California. A comparable BCBS plan through Commonwealth Choice is $1,112 – about what we’ll pay for our current plan after COBRA expires. The only option that really saves us any money is the $732 Neighborhood Health Plan. It carries a $2,000/$4,000 deductible (vs. our current $500 deductible)...and our doctor doesn’t accept it. Changing doctors is a nonstarter. FAIL
All righty then, what about getting a group rate through some club or association?
Sadly, AARP group insurance (via Aetna) is still not available in Massachusetts. FAIL
AAA offers dental, life, homeowners, auto, long-term care, accident, and travel medical…but no general medical insurance. FAIL
The American Society of Journalists & Authors has nothing for Massachusetts. FAIL
Anne doesn’t qualify for membership in the Author’s Guild. FAIL
The Editorial Freelancers Association has nothing at all. FAIL
Health Service Administrators (HSAmembership.com, formerly the Mass. Business Council) is wicked confusing. All I could find were a bunch of links to insurance company websites with no information about pricing. I need to spend a couple more hours examining all of those links. Provisional FAIL.
The cheapest Fallon Community Health Plan that our doctor accepts is $942/mo with a $2,000 deductible. It does include dental, which we currently lack, so in that way it’s better than our current BCBS plan. FAIL for now, but I might come back to this one after COBRA runs out.
Various online quote finders are really just trolling for my phone number -- they don’t really show quotes online. The two agents who tried to sell me cut-rate coverage were both peddling Mid-West National Life, which Google tells me is the object of numerous complaints and lawsuits. FAIL. We already have enough problems with Blue Cross. (In fact, the next item on today’s agenda after posting this essay is calling a collection agency that’s dunning me over a wrongly-denied medical bill).
Speaking of problems with Blue Cross, here’s a funny story: South Shore Hospital billed BCBS $691 for an X-ray that Anne needed. The hospital settled for the $270.85 that BCBS said was the covered amount. But they raised our deductible last month from $250 to $500, and there was a $20 copay. Bottom line? BCBS paid 85 cents. We got billed for $270.
For this, we pay $925 a month?
CONCLUSION: It is difficult to get a group health insurance rate and impossible to get a subsidy without either having a job or being truly impoverished. Unemployed individuals have no alternatives to paying retail, and Massachusetts has the highest health insurance costs in the US.
So I’m going to have to be creative.
Kraken Enterprises could establish a Section 125 Voluntary Plan and designate Commonwealth Choice as an available health insurance option. (A Voluntary Plan is one to which the employer does not contribute.) I’d then set up an account with the Health Connector (which represents six carriers). My employees – i.e., me – can then enroll in a Commonwealth Choice plan through the Health Connector. Kraken Enterprises would collect my insurance payments via payroll deduction on a pre-tax basis. Kraken is then billed for my health insurance premium on the 15th of every month. Any shortfall is the responsibility of the employee – i.e., me.
The monthly insurance premium is triple my gross monthly salary, so payroll withholding is a joke. But wait. What if Anne’s freelance business became a Kraken enterprise? She’d become an employee of my company and her revenues would filter through my corporate accounting. The accounting would be a nightmare – I’d need to manage a separate operating company. I would need to consult my CPA and probably a lawyer as well. It would certainly complicate our already-Byzantine tax situation. After all of that, I have no idea whether this would actually save us any money. As far as I can tell, the only advantage is paying in pre-tax dollars. I’d need to actually create the Section 125 thingie and get an employer number before I can see the employee pricing – I assume it would offer me the same 21 plans that I saw as an individual, and probably at the same prices. Although I'm reluctant to draw the state's attention, maybe I’ll do that next week.
Having two employees would magically qualify Kraken Enterprises to purchase group-rate insurance outside of the Commonwealth Choice umbrella. (The insurance industry defines a “small business” as 2-19 employees). Creating this legal fiction might get us around the assumptions that are limiting us to individual/family coverage. However, being married might screw that up. Insurers want two potential enrollees. I wonder how we’d make out if we got divorced and bought two individual plans? We are both willing to divorce if it will save us enough money on health insurance.
Next week I should spend a few more hours on this:
- I need to investigate the comparable options available to the self-employed. I really prefer to keep our businesses separate, if we can.
- I need to revisit that inscrutable Health Service Administrators website and see if it can make some sense out of who they are and what they do.
- I might open a Section 125 plan so that I can price the insurance options available to employees of Kraken Enterprises. That’s the first step in figuring out whether taking over Anne’s freelance business and getting divorced make financial sense.
Incidentally, it does not appear that federal healthcare reform is going to help us. The plan that's taking shape cuts off subsidies at double the poverty rate.
The only thing that would save our bacon now is if Congress extends the COBRA subsidy for another nine months. AFAIK, that has not even been proposed.
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