Making affordable choices for your studio
A few years ago, a veteran dance teacher working full-time at a New York City–based studio heard a sound that she knew meant trouble. She had let an old injury go unwatched for some time, and in a moment too late, she realized it had resurfaced.
“It sort of sounded like my knuckle cracking,” she says. “The pain that followed made me quickly realize that something was definitely wrong.”
Luckily, she had health insurance through her husband, but her major lower leg injury opened the eyes of a co-worker, who realized that if something happened to her, she would have no way to cover it. It wasn’t long before that teacher was out the door and working somewhere else.
This is an issue that resonates throughout the dance industry. Since many studios have few employees or hire mostly part-time teachers, health insurance is often absent from an employment package.
Douglas E. Yeuell, artistic director at Joy of Motion Dance Center in Washington, DC, says that because his faculty members are considered independent contractors, the studio does not provide coverage. “Offering insurance would sway the balance more into employee status, and we would be responsible for payroll taxes with the IRS,” he says. “It would be a huge financial burden that we couldn’t handle.”
A National Matter
The Supreme Court recently upheld President Obama’s aggressive health care plan, including the Affordable Care Act, which allows businesses with up to 25 employees the opportunity to qualify for tax credits of up to 35 percent to offset the cost of health insurance. (That percentage is slated to rise to 50 percent in 2014.)
Still, the majority of dance studios seem to follow the trend of other small businesses by not offering health insurance for their employees. Says one, who chose to remain anonymous for this story, “I would love nothing better than to provide health insurance for my dance instructors, but it just doesn’t make sense from a financial standpoint. The cost is just too much.”
Health plans that offer full coverage are costly, so it makes sense that a small business might avoid the subject altogether. But in a field where injuries abound and quality instructors are hard to replace, finding an affordable alternative that works for your budget is worth the research.
Making It Work
“Two increasingly popular choices for resource-challenged small businesses are limited medical plans and high-deductible health plans,” says Paul Broughton of Markel, a company that develops and underwrites specialty insurance products for a variety of niche markets. Both alternatives are less expensive per month for the employer, and they work especially well for covering employees who are young and in generally good health.
“Limited medical plans typically offer reimbursement in a predetermined dollar amount for various types of medical services, though the overall payments are limited in a calendar year,” explains Broughton. “And high-deductible health plans control costs by requiring patients to pay the first few thousand dollars of medical expenses each year (the amount depends on your plan). Then, employees typically have unlimited coverage beyond the deductible.”
“In some cases, providing health insurance can help offset the cost of other insurance, like workers’ compensation, general liability and property coverage,” says Broughton, noting that purchasing bundled insurance packages decreases expenses. “Another benefit is that if an employee has an illness or injury, they will be more likely to seek treatment if they do have health insurance. That means, they’ll be back at work sooner, decreasing absenteeism.”
Offering insurance can also help attract and retain a quality staff, which is something that Kathy Taylor, owner of Centreville Dance Academy in Centreville, Virginia, has seen firsthand. “I had purchased private insurance for my family, but when I looked into the option of forming a small group to include the three other employees who were in a similar situation, it was less expensive per person,” she says. “I was also able to offer the benefit to someone who I was looking to hire full-time. That helped her make her decision.”
Taylor offers employees a standard medical plan that costs about $4,000 per employee annually. “I pay the full monthly premium for the employee, and they pay any extra for additional family members,” she says. For her, the annual expense is worth every cent because it shows a commitment to her staff.
Taylor does not provide coverage for her 10 part-time employees, but all are covered under their spouses’ health plans. Likewise, Yeuell says that most of Joy of Motion’s 100 part-time teachers are covered by spouses or partners, or get their own insurance.
Yet not everyone has someone else to rely on for coverage, and not everyone—especially the self-employed—can afford an individual policy. In these cases, Yeuell emphasizes the importance of understanding an employee’s need for outside work. “A lot of our teachers also have a day job and may receive health benefits that way,” he says. “We are not the number-one source of income for these individuals.” DT
Keith Loria is a business writer based in Virginia. Photo courtesy of Joy of Motion Dance Center