This is the first of a two-part series on self-employed travel agents and health insurance issues.

For self-employed travel agents not covered by Medicare, a spouse’s plan or other group option, the cost and accessibility of individual health insurance premiums can make an already challenging business even more so.

Are these health insurance challenges severe enough to discourage those who must furnish their own coverage from joining the ranks of self-employed agents?

“It is definitely a deterrent for people who need to provide their own health coverage,” said Gary Fee, president of the Outside Sales Support Network (OSSN), an organization for independent and home-based agents. “It keeps them from leaping from their day job into something more independent.”

To get the agent perspective on the issue, including real-life scenarios, Travel Market Report spoke with self-employed agents on how the issue of health insurance coverage has impacted their careers.  

Insurance costs outpacing commissions
Providing coverage for herself and two employees under a small group plan is the healthcare solution adopted by Denise Kennedy, owner of Travel Wise, a NEST agency in Wheeling, Ill.

But it’s an option that grows more challenging every year, she said.

“My insurance costs go up every year – and my commissions are not going up as fast. So, in order to still offer it, I have had to downgrade it with higher deductibles and co-pays,” she said.

“I’m finding that insurance companies don’t really want to deal with small groups – they prefer to spread out the liabilities with larger groups.”

The saving grace of a group plan is that Kennedy and her employees have access to health insurance regardless of any pre-existing health conditions. “One of my employees has had back surgery, so he would have a very hard time getting insurance on his own,” Kennedy said.

A bigger barrier
Health insurance is a big issue for travel agents, Kennedy said, noting that the industry is largely made up of independents and small agencies. “And there are a lot of single women in the industry – so spousal coverage is obviously not an option for them,” she said.

The cost issue is far more of a barrier to getting into the business than it was when she became a travel agent 35 years ago, Kennedy added.

“This is not a high-paying business to begin with – and things are worse than they were 20 years ago,” she said. “Back then we had air commissions. The income level was different.”

‘A degrading experience’
Among agents whose career choices have been influenced by the cost of health insurance coverage is Walt Kicinski, who owns Viking Cruise and Travel, a Travel Leaders agency in Seattle, with his wife Hilda.

While the couple is now covered by Medicare, Kicinski said that he found the health insurance scenario “a nightmare” and “a degrading experience” when he left a job with benefits a decade ago to go out on his own as a travel agent.

“After a great deal of effort, including enlisting independent (insurance) agents, the combined premiums for our separate policies was $2,400 a month,” he said. “And that was a while ago.”

Partly because of the cost of health insurance, Kicinski said he returned to his former job three years after becoming a travel agent, staying until he could qualify for Medicare.

“Medicare made the transition from the firm’s coverage to coverage for both of us as independent agents a pretty smooth transition,” he said.

Would think twice today
Tim Larison, owner of Family Travel Gurus, left a job with a major corporation, after 21 years, to start his own travel business in 2002. Given the rising cost of health insurance since then, he said he is not sure the same career choice would be possible today.

“At the time, health insurance wasn’t as costly as it is now,” he said. “If I were making the same decision today, I would have to think twice about leaving a corporate job with health insurance benefits versus paying for my own health insurance as an independent business owner.”

Larison, who is director of the Colorado chapter of the National Association of Career Travel Agents (NACTA), said health insurance costs are an area of concern for self-employed people in any profession.

Many travel agents, if they can do so, get coverage under a spouse’s corporate health plan, he added.

Even expensive under spouse’s plan
Coverage under his spouse’s plan was the option chosen by Seattle agency owner Dan Smith until he qualified for Medicare.

“My wife was paying over $600 a month for me, so it was expensive – and it has not gotten less so,” said Smith, whose agency is Travel by Dan/Caribbean Adventures. “I can’t even imagine what the costs are like for a family,” he added.

Smith, who is director of NACTA’s Pacific Northwest chapter, said he sees no dominant pattern in how travel agents obtain health insurance coverage.

“Some may have spousal coverage, Medicare or are employed at other places but hoping to go fulltime (as travel sellers) eventually,” he said. “It’s all over the map.”

Insurance not the barrier
Not all agents view health insurance coverage as a significant obstacle for self-employed travel agents or even as a determining factor for younger people considering a travel agent career.

There are “a lot of places to get affordable insurance,” said travel professional Sharon Emerson, CTC, who is covered by a Medicare plan.

“I had to research them for my granddaughter and was pleasantly surprised at what is available. But do your homework,” added Emerson, who is owner of Cruise & Tours Planners, a Vacation.com agency in Seattle.

She sees other, more pressing barriers to young people embarking on a career as travel agent. “Younger people can’t come in because it takes a lot of years to get a database and income generation. It used to be five years, now it’s more like eight.”

Next: What does the Affordable Care Act mean for self-employed travel agents?