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Why Group Insurance May Be Best for Your Business, Even If It’s Just You

It’s easier to get than you think.

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RECENTLY, I HEARD a business owner tell a frustrating story about how she was forced to spend a surprisingly large sum of money for the treatment of a health condition. She was angry because her individual health insurance plan, bought through the Marketplace in 2014, had just increased in premium for the fourth time. She expected more from her insurance!

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There has been a growing rift between group and individual insurance since 2015 — most business owners have not been able to keep up on all of the details. I have heard, erroneously, from many business owners that they believe:

  • They couldn’t do group insurance.
  • They would have to pay for all of their employees.
  • Individual insurance would be cheaper.

Not true.

Individual insurance contracts (i.e., Obamacare plans) are no longer the same as group insurance plans. Differences include deductibles, max out-of-pocket financial exposures and pricing. In most cases, individual insurance is less advantageous for the consumer.

Many small business owners are not aware of the increased availability of group insurance.
In 2014, the Affordable Care Act changed many of the regulations affecting small businesses and insurance. States have also been tweaking rules applicable to groups employing between two and 50 people (small groups). In most states, businesses with two or more people are eligible to purchase group insurance. Why is this important? Because, in many states, group insurance may be less expensive per person, have lower financial exposures and have access to larger PPO networks.

How does it work? There is a little known aspect of the Affordable Care Act that makes group insurance very accessible for small businesses. If you have an inception/renewal date of Jan. 1, then the business is not required to contribute to the employees’ premiums. Further, there are no participation requirements (i.e. how many people must participate of the employed population), so the business owner could be the only one participating — a “group” of one. Some states do not allow groups of one. In these states you must have two participants. And note that husband-wife groups are treated differently and may not be eligible.

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If the group insurance plan renews on any other date of the year, then the group is subject to contribution and participation requirements. These requirements are set by the insurance companies and are typically less stringent than most business owners believe. In most cases, the employer is asked to contribute only 25 percent of the cost of individual coverage on the lowest cost plan.
Here is how this plays out in the real world: Most small businesses offer two or three plans for the employees to choose from, one of which will be the “lowest cost.” The employer then calculates 25 percent of what it costs for that single person and the employee is responsible for the remaining premium. How much money are we talking about? Typically an employer is asked to contribute between $75 and $225 per month per person depending on the age of the employee — only for the people who choose to contribute.

As for the participation requirement, it’s typically 70 percent of eligible full-time staff after qualified waivers. A qualified waiver is someone who has an insurance plan from a spouse, the government or an individual plan. Let’s say we have a group of 10 full time employees, four of whom have coverage through their spouse and one who is on Medicare. Here is how we determine the participation requirement:

  • 10 eligible-5 qualified waivers = 5 employees

In this case, to attain 70 percent participation, only four people must participate!

Marcus Newman is vice-president of small business sales with GCG, a full-service financial, employee benefits and risk management firm, as well as a public speaker and educator.

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Columns

Sophomore Edition of Watches & Wonders Miami Draws 28,000

Attendance was up 40% at the free event.

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IF I SAID YOU could spend a weekend in February surrounded by blue skies, palm trees, dozens of luxury cars, the finest champagne, extremely large yachts, huge jewels, extraordinary works of art, and the latest releases by some of the world’s most respected Swiss watch brands (whew!), would you do it?

Well, you can, and next year, you should. The sophomore edition of Watches & Wonders Miami this past weekend had all of those magnificent things, J-Lo and A-Rod sightings, and oh, so much more.

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Visited by nearly 28,000 people over three days, according to the event organizers, Watches & Wonders Miami – a joint effort between the Fondation Haute Horlogerie (FHH) and the Miami Design District Associates – is already being hailed as a success with a 40 percent increase in attendance from its first edition in 2018. What makes this event different from watch-oriented fairs such as Baselworld, however, is that the event is open to the public for its duration and doesn’t charge an entry fee. Oh, and the fact that the event is held outside in 80-degree weather rather than in the middle of a Switzerland winter doesn’t hurt, either.

Another plus to Watches & Wonders Miami is that guests are invited to visit many of the brands and see their latest novelties in their pre-existing boutiques located in the Miami Design District in lieu of booths at a traditional trade fair. This makes for an intimate environment for those in attendance, and in some cases, buyers are treated to additional perks like visiting Cartier’s rooftop VIP lounge (I may or may not have had a glass of wine or two up there. I’ll never tell.) Attendees also have a variety of opportunities to learn more about the watchmaking world through the classes, seminars, lectures and panels set up at varying times throughout each day. For example, if independent watchmaking is your thing and brands like H. Moser & Cie or F.P. Journe are what you covet, then you likely would have wanted to hang around the independents tent where many pop-up shops were located and where several panels on collecting independent watches were held.

As a first-time attendee of the three-day event, what I probably liked most about it was that there wasn’t this separation of Richemont brands versus LVMH brands versus Swatch Group brands versus independent brands. I was running from Zenith to Romain Gauthier, then from Omega to Girard-Perregaux for appointments, which is something I could never do at one of the other watch fairs.

Watches & Wonders Miami offers an opportunity for those who may not be able to attend the SIHH in Geneva or fork out the thousands of bucks it often costs to get to Baselworld.

Those who are members of the press, or who are collectors, or who are just your everyday watch enthusiasts can come and see the latest releases, and in some cases, releases specific to W&WM. And as a bonus, there is jewelry, too, including pieces by master craftsman Sevan Biçakçi, who was at the event to showcase his line of incredible one-of-a-kind watches nine (nine!) years in the making.

For now, Watches & Wonders Miami is one of the few watch events held in the U.S. that brings together brands as established and recognized as those exhibiting there. And with some of the international watch shows falling apart at the seams, it looks like it could be around for a long time to come.

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David Geller

Here’s Why Coin Dealers Make More Profit Than Jewelers

It has a lot to do with a willingness to move quickly.

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WHO’S BETTER AT BUSINESS: a coin/bullion dealer or a jewelry store owner?

Odd question, right?

I recently had a conversation with a store owner whose operation did $3 million in total sales, which were divided into two income streams: $1.4 million in fine jewelry sales, and $1.6 million in coin and bullion sales.

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I asked this store owner a few questions, and his answers were intriguing.

“What’s your margin in jewelry sales?”

“About 45 percent.”

“What’s the margin selling bullion and coins?”

“Anywhere from 8 to 12 percent.”

“OMG, really? That low?”

“Yep, you buy it, turn it fast and make a quick 8 to 12 percent profit.”

“When it comes to coins and bullion, when do you consider them old?”

“Two weeks. At such low margins, we can’t hang onto them. If a Canadian Maple Leaf coin stays here for two weeks, we’ll melt the sucker!”

I did not ask what percent of inventory is scrapped versus sold. But let’s assume one-third is sold a tad above cost and the rest at break even, and see what kind of money we could make if that’s all we did.

Let’s average the profit to an even 10 percent. Calculating one-third of 52 weeks means we will make a 10 percent profit 17 times a year. So say we buy a one-ounce coin for $1,300 and make 10 percent profit ($130). $130 made 17 times a year means we make $2,210 in gross profit.

Jewelry has its own “numbers” like coins/bullion do, just different ways of counting. So, similar to the coin example, let’s start with a ring that costs $1,300. Let’s say that $1,300 ring after a year sells for $2,600 and we make a gross profit of $1,300.

The coin dealer is doing better by almost twice as much, even though he only made 10 percent per sale and the jeweler made 50 percent.

Most jewelers look at the gross margin only. “Yeah, I made keystone.” But they’re not considering the turn ratio. And what if it took more time — like, say, two years? When you wait that long, the bad stuff starts showing up as debt. Your accounts payable go way up, as does credit card debt.

A coin dealer is better in business because he is forced to liquidate quickly. They think in terms of money, whereas jewelers think in terms of “it’s gold and diamonds; it will be in good shape and salable long after I’m in the ground.”

Jewelry is old in 12 months. Coins are old in two weeks.

Jewelers just shove their old crap to the left side of the case and stuff more crap in the case. I had a jeweler friend to whom I explained this, and he said he had a buddy who owned a furniture store. The furniture store guy said he never had a problem with old inventory. He said, “Where in the hell am I going to put extra beds???”

Learn something from the coin/bullion dealer. The faster you turn the item, the better for your cash flow.

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Editor's Note

Our Editor-In-Chief Admits He Didn’t Know What WhatsApp Was … Do You?

Like other tech, it has the potential to make clients way happier with business owners.

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WHEN I SAW this issue’s “Do You or Don’t You” question, I was just as baffled as many of our readers.

The question, posed by our group managing editor, Chris Burslem, through our Brain Squad survey was this: “Do you use WhatsApp or another messaging service in your marketing or to otherwise communicate with customers?”

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I admit it: I wasn’t 100 percent sure what WhatsApp actually was.

So, I looked it up, and it’s a messaging app that sends text messages for free through an Internet connection. But its advantage is that you can create a business profile so users can see your address, website and contact info. It also allows businesses to save and reuse messages that you frequently send (e.g., “Your repair is ready!”), as well as sort your contacts by labels (e.g., “Frequent client,” “Engagement client only,” “Repair client only,” etc.).

In other words, I quickly learned that WhatsApp has some really cool features for small business owners.

Unfortunately, I think a lot of jewelry retailers are burned out on new tech. And yet, technology like WhatsApp, social media and review-management services like Podium can allow you to connect with clients in ways that they prefer and provide more efficient customer service.

If you’d be willing to walk uphill both ways through snow and sleet to serve your customers, are you also willing to delve into the latest technology to do the same?

Trace Shelton

Editor-in-Chief, INSTORE
trace@smartworkmedia.com

Five Smart Tips You’ll Find in This Issue

  • Geofence your competitor’s store. (Manager’s To-Do, p. 26)
  • When working with a female engagement ring client, ask her to close her eyes and describe the perfect ring. (The Big Story, p. 39)
  • When dealing with a customer complaint, say “Tell me more” in order to put them at ease. (The Big Story, p. 40)
  • Ask job candidates, “Tell me how you prepared for this interview.” (Tip Sheet, p. 47)
  • Bundle slow-moving product with a fast seller in order to clear it out. (David Brown, p. 52)
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