By Lisa Casinger
Can you afford to join a dying trend?
One of the most coveted employee benefits, health care is becoming an issue retailers can no longer ignore. Consultants say avoid it at all costs, and from a numbers point of view they're right. But as retailers hope to woo and retain talented, quality employees they have to compete in a larger benefit arena.
According to the 2005 Annual Employer Health Benefits Survey, published by The Kaiser Family Foundation and Health Research and Education Trust, the number of businesses offering health insurance has declined steadily over the last five years as coverage costs continue to outpace inflation and wage growth.
Forecasters from the U.S. Centers for Medicare & Medicaid Services predict spending for health care may double to $4 trillion by 2015, due to an aging population using more drugs, hospital care and technology. At that point, 20 cents of every dollar in goods and services produced in the U.S. will be consumed by medical spending.
Independent retailers assume they can't offer health insurance because of their size or because it's cost prohibitive, but there are options.
Myriad organizations and agencies have reams of data available, much of which is accessible online. Though plans, pricing and regulations vary by state, here is an overview and a few suggestions on what to look for.
Getting started
You may be eligible for a small business plan if you have at least two full-time employees (including yourself), you are a legitimate business (have a business license) and meet the minimum employer contribution as set by the insurance company.
The first step is to find out what your employees' needs are and decide what expenses you can and are willing to cover.
Ellen Springer, a CPA and owner of Springer Financial Services, said many smaller business owners opt for individual plans. These allow the employee to work directly with the insurance company, like BlueCross/BlueShield, for example, to select the plan that's best for them. Often the provider will bill the premiums through the employer who then makes a payroll deduction and a company contribution to the cost.
These plans are portable and do not require the employer to make a contribution, though many do offer something to offset cost to the employee. The downside to individual plans is that they have to be underwritten, so employees with serious health problems or pre-existing conditions may not qualify.
'The most important thing for employers is to manage their plan,' Springer said. 'They need to revisit the plan every year and compare it to what's available on the market. That's the best way to control costs.'
Springer also suggests working with an agent who represents several providers and who can offer advice on the different plans, tailoring them to meet your needs.
Group insurance plans are another option though they're more costly overall and typically the employer must pay up to 50% of the premium. Group plans are available through chambers of commerce, industry associations or other civic groups. Some states have or are passing bills offering financial incentives to small businesses that contribute to employee health insurance premiums.
With group plans come options like health savings accounts and flexible spending accounts (also known as cafeteria or Section 125 plans). These options take pre-tax dollars and put them into spending accounts set aside for medical expenses.
HSAs go hand-in-hand with high deductible plans (those with $1,000 individual or $2,000 family deductibles). The main difference between HSAs and the flex accounts is that money in flex accounts is use-it-or-lose-it while HSA funds roll over.
Due diligence
Finding the insurance provider that fits your needs is as important as finding the right plan. Consider these tips:
Check the provider through A.M. Best, Moody's, etc. Is it fiscally fit? How large is its coverage pool; the larger the pool the more stable the premiums.
Does the provider have good customer service? Check references.
What's the largest deductible and co-pay you can afford?
Is there a provision that limits the out-of-pocket payments per year?
Will the policy be renewed every six months or 12?
Look for carriers that use technology for self-service and claims management.
Discounts, not insurance
If you've looked over all the plans, done the research and ran the numbers and still can't make health insurance work, there are other options. Consider consumer-driven health care. A relatively new industry, consumer-driven health care is growing and putting employees in control.
Carol Garvey of The Garvey Group offers a discount program that is not insurance, but an alternative way to offset the rising cost of medical expenses. Through this program the employee pays a flat monthly fee and receives discounts on the spot for medical, dental, vision and chiropractic care, as well as alternative medical services like massage therapy and cosmetic, traditionally not covered under most health plans.
'Doctors are ready for this because they're already giving discounts to HMO or PPO providers,' Garvey said. 'With a discount program they don't have to wait for claims processing or reimbursement from a health insurance company, which often takes months and a lot of paperwork.'
The benefit to the consumer is that since it's not insurance there are no disqualifiers like pre-existing conditions, no waiting period to enroll, no deductibles and no spending caps. Employers can offer this program to their employees and have it billed through a payroll deduction. If they choose they can offset the cost for their employees, but there are no requirements for the company to make any contributions.
The plan is portable so when the employee leaves they can take it with them and the employer doesn't have COBRA expense.
If an employee has medical coverage, either through an individual plan or a spouse's plan, there's a smaller package for dental, vision and chiropractic services. Another benefit to the plan is the family rate covers everyone living in the household, whether it's in-laws, foster children, significant others or roommates.
Discounts on services can range from 70%-80% on preventive services, 50% on vision to 30%-50% on chiropractors.
The downside to discount programs is that they are not a comprehensive health insurance plan so employees still would need a plan for long-term or catastrophic illnesses and while the network of providers who participate in discount programs is growing, there still are doctors and pharmacies not on board. Also, depending on the city, discount and rates charged by providers, out of pocket expenses could be an issue.
To cover all bases, Garvey said the big picture plan for self-employed individuals would be to have a high deductible, low premium plan for major medical issues, an HSA account to help pay deductibles and reimburse for expenses and the discount savings plan for day-to-day benefits.
The bottom line is there are health insurance options for companies of all sizes and options to fit any budget. Whether you work through an agent or go it alone, your employees will thank you in the long run.
For More Info
Lisa Casinger
A.M. Best
ambest.com
American's Health Insurance Plans
ahip.org
Employee Benefit Research Institute
ebri.org
International Foundation of Employee Benefit Plans
ifebp.org
(nonprofit educational association devoted exclusively to employee benefits education)
Moody's
moodys.com
National Association of Health Underwriters
nahu.org
National Committee for Quality Assurance
ncqa.org
(nonprofit group that measures health care performance, releases a comprehensive list of the top accredited health care providers each fall)
Service Corps of Retired Executives
score.org
Small Business Administration
sba.gov
Small Business Answer Desk
800-827-5722
Small Business Institute
smallbusinessinstitue.org
Springer Financial Services
springerfinancial.com
770-429-0299
The Garvey Group
consumerhealthsavings.com
800-503-7616
