Small companies have a hard enough time finding affordable health coverage for their workers. When your staff is scattered throughout the U.S., it's even tougher.

Barbara, Westfield, Mass.
We are a small company of just over 30 employees based in Massachusetts. Our employees are across the USA, working out of their homes or at clients' sites. We are having a hard time finding good health insurance. Any suggestions?

By Catherine Clifford and Rose Fox, CNNMoney.com writers
You are not alone in having trouble finding a viable health insurance solution for your small business. In 2008, 69% of small businesses surveyed by the National Small Business Association said they want to offer health insurance to their employees, but only 38% were actually able to do so.

Nearly all of America is engaged in a debate over President Obama’s proposed health care reform, but the cost of health care has been a hot-button issue on Main Street for years.

"The cost of insurance has been the number-one issue for NFIB members for over 20 years," says Amanda Austin, the director of federal public policy at the National Federation of Independent Business, a nonprofit trade organization. "It is very hard for small employers to emulate large employers — small employers don’t have the ability to have large risk pools. They can have a very significant premium increase if they have one person get sick."

As hard as it is to find coverage at all, it's even tougher when you're trying to find an insurer willing to write a policy for a company with employees scattered around the country. But as businesses embrace the low overhead of a telecommuting workforce, that's become an increasingly common situation.

"The reality is that Massachusetts-based insurers are going to require more than half of the participating employees to be residents of Massachusetts," says David Kaplan, a licensed insurance adviser with Aronson Insurance in Needham, Mass. "Absent that, there are a few companies that offer national plans."

Amir Mostafaie, a consumer health spokesman at eHealthInsurance.com, echoes that assessment.

"If fewer than 51% of your employees work in your home state, it becomes more difficult to find a carrier to underwrite your plan," he says. "UnitedHealth (UNH) has been the exception here — in my experience — by being willing to quote group coverage for small businesses with more than 51% of their workforce residing outside the state. Instead, United has generated quotes using the state with the highest concentration of employees."

To make your search easier, Mostafie recommends going through a licensed agent or broker who works with businesses in your industry and geographic region. Do your own homework as well, reading up on industry definitions of terms like "coinsurance" and "out of pocket" to make sure you know what you're getting into when you choose a policy.

It may help to survey your employees to find out what kinds of coverage are most important to them. For example, if most are older adults with grown children, a plan without maternity coverage might save you money while still giving your employees all the benefits they need.

Finally, Mostafie emphasizes the importance of developing programs to keep your employees healthy, such as arranging for discounts with a national fitness chain or offering bonuses to smokers who quit. "Even if you can only find an insurance solution for the employees in your home state," he says, "having a healthier group will help you save money on premiums in the long run."

As insurance costs climb, fewer companies are able to afford those premiums. In 2009, less than half of companies with less than 10 employees offered coverage, according to a comprehensive Kaiser Family Foundation study released this week.

"We are seeing less and less new small business owners offering coverage, because it is very expensive and employers do not like to offer a benefit and then take it away," says Austin of the NFIB.

The scarce choices and unmanageable costs small companies face have advocates clamoring for reform — but like most of America, the small business community is divided in its willingness to see drastic changes made to the existing health-care system. The National Small Business Association is leery of expensive reforms.

"We don’t think there is enough cost containment incorporated in the bill" that is currently being negotiated in Congress, Brogan says. "To put [small businesses] in any kind of disadvantage now, when we need the job creation the most, is something that we are concerned with."

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