Group Health Insurance
Offering group health insurance as an employee benefit is a great way to attract top talent to you company, and to keep your employees healthy. With the rising costs of health care, everyone is concerned about the types of benefits that a job will offer to them and their family. To stay competitive as an attractive employer, you need to be able to offer a complete package of employee benefits, with health coverage being the foundation.As any employer knows, the cost of providing health coverage to your employees has rising dramatically over the last 5 years. It is becoming increasingly difficult to offer the same benefits that your employees are used to. Most employers are being forced to find ways to reduce their costs in this area, and there are a lot of effective ways to do it. Lets discuss some of the ways that you can reduce the cost of your group health insurance, yet still remain competitive in the job market. Here is a recent story from WSOC TV in Charlotte, NC about some group health plans being offered by more employers today in an effort to save on premiums "HSA Qualified Health Plans." Hi-Low Option Plans If you are an employer who has 25 or more employees participating in your plan, you should be able to offer a Hi-Low health plan. This is where you have a choice of two plans that the employees can choose from. One has a higher deductible, and one has a lower one. Many of your employees will opt for the higher deductible plan since the cost to them will be lower, and this will save you some money at the same time. There are a lot of people who rarely go to the doctor and rarely get sick, yet they still want to have health insurance protection. Many of these people will choose a less expensive plan with a higher deductible because they don't feel like they need all the bells and whistles with their plan. At the same time, you still are offering a more benefit rich plan to those employees who are willing to pay more to keep the kind of benefits they are used to having. H.S.A. qualified or High-Deductible Health Plans You probably already know about these, but they are health insurance plans that have a high deductible and they qualify to be used with a tax-free Health Savings Account. With these plans, you deposit pre-tax money into a health savings account that can be used to cover the cost of your deductible each year. When you use the insurance, you have to first meet your deductible before the insurance plan pays for anything. Once the deductible is met, the high-deductible health plan (HDHP) starts paying according to your co-insurance agreement. The best plans will pay 100% once you meet your deductible. These types of group health insurance plans are less expensive than traditional plans, and can save your company a lot of money. Some employers will also make deposits into the pre-tax health savings account for each employee. This way they have some money there to meet some of their first out of pocket expenses. Increase Your Plan Deductible, Add Supplemental While employees generally won't like the idea of having a higher deductible, this strategy will save you money and keep your employees happy. Your group health insurance premiums will go down by increasing your deductible on the plan. Then, to help the employees cover the added risk, you can offer some supplement insurance that would cover the extra cost of the higher deductible. You could either pay for all of this supplemental coverage, or part of it, or let the employees pay for all of it. For example, you could increase your plan deductible by $1000 per person and then add on a supplemental benefit plan to cover $1000 of out-of-pocket, deductible expenses. Most employees won't ever go into their deductible This can save you thousands of dollars per year, depending on how many covered employees you have. Shop Around If you been with your same group health insurance provider for a while, it's very possible that you could save some money by shopping around to other companies. Find a good independent broker who has relationships with many different companies, and let them do the shopping for you. It is illegal for anyone to discount insurance premiums, so you will not pay any more or less by using a broker vs. going through the insurance company directly. A good independent broker will be worth his weight in gold to you and your company.
By DANA MATTIOLI Sheryl Weldon, owner of Commerce Welding & Manufacturing Co., saw health-insurance payments increase to more than $800 monthly per employee from about $200 five years ago. With monthly revenue down 10% since December, Ms. Weldon stopped providing health coverage to employees, including one being treated for prostate cancer, for the first time in the 64-year-history of the Dallas sheet-metal company. Ms. Weldon and several of her 14 employees are going uninsured and the third-generation business owner is struggling with the emotional toll of the decision. "I have a terrible time handling that I can't give them that coverage," says Ms. Weldon, 52 years old. "How do you expect someone to be at their job everyday and perform if they can't be healthy?" As the Obama administration wrestles with broader questions of health-care overhaul, tough economic times are forcing more businesses to grapple with stressful questions about discontinuing coverage. Health-insurance premiums for single workers rose 74% for small businesses from 2001 to 2008, the latest year data are available, according to nonprofit research group Kaiser Family Foundation. About 10% of small businesses are considering eliminating coverage over the next year, up from 3% in 2005, according to a recent survey by National Small Business Association. That follows earlier declines in coverage, with just 38% of small businesses providing health insurance last year compared to 61% in 1993, according to the trade group. In 2007, 41% offered coverage. A Hewitt Associates survey found that 19% of all companies plan to stop providing health-care benefits in the next three to five years. 
Assurant Health, a national health-insurance provider, has recently seen more small businesses canceling group health insurance coverage. Scott Krienke, senior vice president of product lines, says premiums typically increase 8% to 16% yearly for small businesses, with the smallest firms particularly at risk for large rate increases.In March, after losing a large client that accounted for more than 50% of revenue, Kelly Reeves canceled group health insurance for her three employees. Ms. Reeves, president of seven-year-old public-relations firm KLR Communications, says she had to choose between that and laying off an employee. Ms. Reeves says turnover is a concern even in this slack job market, but she has told her employees she understands if they leave for a job with medical benefits. Should business pick up, she plans to reinstate group health insurance but provide less expensive coverage. "You want to attract good talent and benefits are important for that," says Ms. Reeves. Even small businesses that continue to provide benefits say the question of dropping group health insurance is one of the most difficult they face. Shanahan Sound & Electronics Inc., a Lowell, Mass.-based sound- and video-design firm, has seen a 50% decrease in monthly revenue since last year. Health-insurance costs increased by 14% this year to approximately $7,000 per month. Catherine Shanahan, president of the 16-employee firm, refuses to cancel the plan. "I really believe it would be the worst thing in the world I can do for morale," she says. Karen McLeese, vice president of employee benefit regulatory affairs at business services firm CBIZ, has been steering companies that consider dropping group health insurance to less costly high-deductible plans and cost sharing. "In today's environment, health insurance is extremely costly and to shift that burden to individual employees when raises and bonuses are trimmed really makes it a double whammy," says Dennis J. Ceru, professor of entrepreneurship at the Babson College Graduate School of Business near Boston. Many of the employees losing insurance are priced out of private plans. Mr. Ceru says the cost for a family on an private plan can exceed $20,000 a year. Mr. Morgan has looked into private health insurance but says he can't afford it. At the same time, he understands Ms. Weldon's decision to eliminate coverage. "We needed to cut health care," says Mr. Morgan. "It's the only thing left to cut."
Dana Korey, president of San Diego organizing company Away With Clutter, eliminated health insurance for her 15 employees in January. "It was incredibly painful, these people are like family to me and I felt like I let them down," says Ms. Korey. Amid the recession, many of her clients could no longer justify organizing jobs, which typically range between $3,000 and $7,000. Now Ms. Korey is changing her business strategy and creating a DVD on organizing. She is using the savings from canceling group health insurance, roughly $5,500 monthly, to fund the venture. Alternatives to Eliminating Health Coverage *Consider Cost Sharing: Companies that are paying 100% of employee health care may want to switch to a cost sharing model where employees help defray the cost. Switching from a 100% health plan to a 50/50 split can significantly free up funds. *Increase Charges: Many companies are increasing employee co-payments and deductibles. *Shop Around: If your current provider is charging you the maximum renewal rate each year, shop around for a new provider. A health insurance broker can help manage your search, or you can search for better group health insurance rates online. *Manage Your Prescription Drug Plan: Many employers don't realize the amount of money they can save by requiring employees to use generic versions of prescription drugs, says Tim Stentiford of Hewitt Associates. *Consider Wellness Plans: Fostering healthy eating and exercising habits can save employers insurance money by creating a healthier workforce. Dennis Morgan, a driver at Commerce who's being treated for prostate cancer, worries about how he will pay for surgery should he need it. The 60-year-old's $500-a-week salary makes him eligible for a program at his hospital where he can receive prescriptions at a low cost and pay between $5 and $10 for doctors' visits. But he would be required to pay a percentage of the cost of any medical procedure. Group Life Group life insurance is another employee benefit that you can offer in addition to, or independent of group health insurance. Group life can be obtained for companies as small as 2 employees, and for as many as you want. It's a very low cost benefit that you can provide, and your employees will appreciate it. Typically employers will offer a basic coverage of $25,000 or $50,000 per employee. This is usually done without the need for underwriting to be done at all, and it is very affordable. In addition to this, it is very inexpensive to also add on Accidental Death & Dismemberment coverage. As an example, I recently helped a small employer obtain $25,000 of group life on the owner and two employees, with an additional $25,000 of Accidental Death & Dismemberment, and it only cost the employer about $22.00 per month. The additional coverage for the Accidental Death & Dismemberment pays if the death is caused by an accident, or if the person is in an accident and they lose limbs or eyesight because of it. These kinds of policies are by no means meant to provide all the insurance protection that a person may need. It's designed to give them some basic coverage at no cost to them, on top of or independent of the group health insurance. Offering this to your employees is a great way to stay competitive and not have to spend a lot of money. Go from Group Health Insurance back to Insurance page.
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Accelerating health-care premiums and sharp revenue shortfalls due to the recession are forcing some small companies to choose between dropping health insurance or laying off workers -- or staying in business at all.
Still, the decision rarely sits easy with those making it. "If I think about it, I can't sleep," says Ms. Weldon, who says that her father and grandfather had always covered 100% of health-insurance expenses.
