But after a 10 percent increase for this year and a higher one expected in 2005 thanks to high policy usage, she’s not as optimistic. Now Pilato worries that she might soon be priced out of offering it at all.

“I feel obligated, morally and ethically, to offer insurance, but it’s really tough because it’s so expensive,” Pilato said. “I don’t know what the solution to the problem is, but I hope someone finds it soon.”

So do many other companies and their employees.

Insurance rates have been a headache to businesses, large and small, for the past several years. The pain might be subsiding a bit, but it is not close to ending.

Companies are now seeing increases of between 10 percent and 15 percent for 2005, which are more palatable than the rate increases of between 15 percent and 20 percent this year.

The downward trend is due to significant changes companies made to their benefits plans during the past two years in an attempt to control rising costs, experts said. The changes were particularly painful for employees, who started paying more toward premiums and co-payments on drugs and doctor’s visits.

Some workers even pay a percentage of the cost of their procedures, which is called co-insurance. It’s paying off for both employers and employees, said benefits consultant Barbara P. Bailey, head of the Richmond health and group practice of William M. Mercer.

“Employees should not see as high an increase as last year,” Bailey said.

Prescription drug costs and overall health-care spending are still rising, but they, too, have slowed, according to the Center for Studying Health System Change, a Washington -based health-care policy research group.

“Cost increases have been running 12 to 20 percent for the past four or five years, but I think they’ve peaked,” said Patrick Moore, a financial planner with financial services firm Perlin, Rossen & Moore in Virginia Beach. “The rates are planing, but you have to factor in inflation, and remember that insurance companies are in business to make money.”

Skyrocketing insurance rates can be especially burdensome for nonprofits and small businesses.

Dory Wilgus, president of U.S. Flag & Signal Co., keeps finding her company absorbing more and more health insurance costs to protect her 35 employees from bearing the brunt of the burden. The Virginia Beach company shifted its portion from 50 percent to 60 percent in 2003. For the coming year, with a 38 percent increase looming, the company will take on an even bigger chunk of the premiums.

“If we passed any more on, it would become unaffordable for them,” said Wilgus, a board member of the National Association of Women Business Owners’ local chapter. “It’s no longer a benefit if you can’t use it.

Wilgus said she’d rather see a slight increase in the price of her products than have her employees in the lurch.

“Many of them have been with us for years, and they’re like family,” Wilgus said. “There’s no way I would see them lose their insurance because they couldn’t afford it.”

Even though it’s part of a larger national organization, South Hampton Roads Habitat for Humanity in Norfolk must secure coverage as an individual organization, which gives its five full-time employees little negotiating power.

The group expects to get a lighter hit for 2005. Instead of a 12 percent increase like the one for this year, the rates will probably rise by 10 percent. That’s little solace for Juanita Beverly, Habitat’s finance director, who already plugs 28 percent of her salary into premiums for the nonprofit’s family plan. She recently got a $200 a month spike after her 56th birthday.

“Nonprofit employees don’t make that much money to begin with,” said Habitat executive director Ellen Widoff. “Insurance is one of the few benefits we offer, and we don’t offer retirement. It’s certainly not a retention tool. Our benefits package may be working against us.”

Norma Dorey, owner of Changes Hairstyling and City Spa in Norfolk, and her employees will split a 6 percent increase in 2005, better than the 18 percent they were hit with this year and the increases of up to 48 percent the business has seen in the 15 years it has offered insurance.

The rate increases she sees every year are taxing on her 97 employees because they work on commission. The premiums remain the same, regardless of how business was during the pay period.

“Every year when they go up, I hate even telling my staff,” said Dorey, who also own’s Jake’s Place, an all-male spa in Norfolk. “It’s especially hard on the single moms.”

Not everyone is suffering from sticker shock. Thad Doumar, who runs Doumar’s Cones & Barbecue in Norfolk, found himself in an enviable position this year when his rates actually decreased by about 13 percent after a high-risk employee retired. The year before, he was able to break even by switching plan providers.

But he hasn’t completely escaped unscathed. His rates had gone up an average of 20 percent each year for the five years before that.

“If you want to attract good people, it’s something you have to do,” said Doumar, who pays 80 percent of the single rate for his employees. “I look at it as part of the cost of doing business.”

Forrest Ward, owner of Virginia Commercial Services in Hampton, doesn’t bog himself down with the details of the insurance he provides for his seven employees. When it’s time to write that first check after a rate increase and he sees the new amount owed, he simply sighs and scrawls out the bigger figure. He’s always paid 100 percent of the premium, and he has no intention of changing that now.

“It doesn’t do me any good to know about it ahead of time,” said Ward, whose company “fixes everything inside a restaurant,” from heating units and refrigerators to exhaust fans. “This industry is very competitive for quality employees, and my business is dependent on having good people, so this is a good way to attract them.”

Ward figures he spends about $3,000 a month on employee coverage, about 50 percent more than when he started the business in 1998. But he doesn’t see the point of passing the costs along to his workers.

“I’d just have to pay the guys more,” Ward said. “Because of the way taxes work, it’s less efficient to have them pay for part of the insurance and then raise their wages.”

Health insurance is an especially significant issue in the blue-collar workplace.

Labor forces at older-line manufacturing companies tend to be older, and therefore more prone to the ailments of age. And heavy industrial jobs, by definition, can be grueling, with sore backs and bad knees common.

The most vivid recent example of conflict over health insurance came two years ago.

In August 2002, about 1,000 unionized Dominion Virginia Power workers in Hampton Roads walked off the job for 13 days during heated contract talks with the state’s largest utility.

Along with pensions, much of the friction during negotiations pertained to insurance, a key point for a bargaining unit with an average age of about 50.

Under the contract ratified the following month, workers received improved benefits in some areas. For instance, the new agreement doubled the maximum lifetime medical benefit for insured workers and dependents, to $2 million, and added chiropractic coverage.

But the contract also allows yearly adjustments of deductibles and out-of-pocket payments based on the medical consumer price index. The increases are capped to 5 percent annually.

Drug co-pays rise each year of the contract, in increments of $1 to $4, topping out at $46 per prescription for brand names through mail order in 2007.

Company officials declined to discuss the costs or savings in detail, saying only that “we’re looking at anything and everything we can to help hold costs down,” said spokesman Dan Genest.

But for workers, the benefits were perhaps as good as they could have expected.

“We’ve always paid our fair share” of insurance expenses, said Jack Wells, president of International Brotherhood of Electrical Workers Local 50, which represents 3,700 Dominion employees across North Carolina, West Virginia and Virginia.

“I think the company could probably take more of the costs. I don’t know that I can complain now.”

Health coverage was also one of the most contentious issues during the recent, two-month contract talks between Northrop Grumman Newport News and United Steelworkers Local 8888.

The deal, ratified in June and running through October 2008, covers about 8,500 hourly shipyard workers.

The Steelworkers managed to cap health-care premiums by choosing a less costly health plan and cut the employees’ share of increases from 50 percent to 25 percent.

But some costs increased. The plan implements annual deductibles for in-network physician visits, for instance, of $150 per individual and $300 per family. The old program required no in-network deductibles. Out-of-network deductibles are increased as well.

Out-of-pocket maximum payments by patients were increased by about 50 percent. Drug co-payments went up too.

As a vast, established smokestack company with a large retiree base, Ford Motor Co. has been tagged hard by skyrocketing insurance expenses.

The company has a total insured population of about 560,000 people. Insurance costs hit $3.2 billion in 2003, up more than 14 percent from the previous year.

And anecdotally, the automaker estimates that health care adds about $1,000 to the cost of building a new vehicle.

Some of those expenses are being passed along, even in its management and salaried ranks, jobs which are generally not as physically taxing as those on the plant floor.

A year ago, Ford boosted the amount its white-collar employees and white-collar retirees pay for insurance. Workers covered by one plan saw their annual maximum personal payout double to $1,000, with co-payments on generic prescription increasing from $7 from $5. A more basic program capped the maximum yearly payout at $4,000, up $1,000.

The company is also trying to hold down costs with lifestyle wellness plans in cooperation with the United Auto Workers union, hoping that employees who stop smoking, eat right and work out will file fewer and less expensive claims.

“We’re encouraging employees to become better health-care consumers,” and therefore reduce costs, said spokeswoman Lydia Cisaruk .

Privately held landscaping tool manufacturer Stihl Inc. in Virginia Beach saw health insurance cost increases in the “low single digit” percentages this fiscal year, according to officials, who would not be more specific.

While the company is conducting an audit later this year to ensure that claims are being paid promptly, Stihl has no plans to reduce its level of coverage for its 1,100 local employees.