Employers, workers have option for coverage

Latest forecasts indicated an increase of 20 percent to 50 percent for small business group health care coming in the near future. Is this sustainable for your company or is it time to look at other options?

Owners of companies have to, at some point, ask the question: “Am I in the health insurance business or would it be more beneficial for my employees and company human assets to be focused on our company objectives and how to capitalize on our abilities to build teams, manufacture, sell, install and service our customer base?”

After 25 years of wearing the manager’s hat in the manufacturing sector and formulating annual budgets, I can relate to and fully understand the pain of escalating overhead costs, with health care being a major uncontrollable line item. Where do we cut costs to offset these ongoing increases and maintain our profit margin?

Businesses with 50 or fewer full-time equivalent employees aren’t required to offer health coverage. However, most employers desire to offer health care to their employees as an ongoing benefit and a reason for the employee to stay with the company or to attract new quality employees.

Costs continue to be a major factor in the business model. The landscape of health care has changed dramatically, and new, cost-efficient options have risen for the small employer.

Are you investigating your options or continuing to accept the rate increases? Is it time for you to get out of the insurance business but continue to offer health benefits to keep happy employees?

Perhaps most employers are not aware of their options to change the architecture of their health benefit program while still offering cost-efficient benefit allowances to their employees.

Let’s look at employer-based group health insurance historical increases.

How much have the average costs for health insurance grown from 1999 to 2013? In 1999, an average single coverage cost was $2,196 and an average family cost was $5,791. In 2013, an average single coverage cost $5,791 and an average family cost $16,351. (Source: Kaiser/HRET Survey of employer health benefits 1999-2013).

In the 2008 time frame, U.S. employers began shifting to individual health insurance and away from group-based plans.

The primary reason is that, in many cases, it was more cost-efficient for the employee and employer to go with individual plans. Also, individual plans could be purchased to fit the individual family needs rather than a one-size-fits-all approach with an employer-provided group plan.

Individual plans do not experience rate increases that are present in group ratings. Deductible and co-insurance amounts can be picked to best suit your needs and personal budget. If you prefer an HSA with higher deductible, the employee can choose that option, where as others may prefer lower deductibles.

Today, there are arrangements that allow employers to provide health care allowances for the employees that are tax deductible for the employer and tax free to the employee. This allows the employee to shop for and purchase their own custom-built plans with the medical carriers and plan options of their choice.

With pre-existing conditions now excluded and no longer a factor in pricing or eligibility, and in many cases reduced premiums through the PPACA Act due to subsidy funding, total health care costs may be substantially reduced and made much more affordable for the employer and employee.

Did you know Ohio now has a new, non-profit health insurance company?

Yes, your employees could shop for off-market plans with this carrier. The list of participating doctors and hospitals is huge. Actually, it is difficult to find a doctor or hospital that is not included in the network, and the pricing is very competitive.

This would allow the employer to focus on their business and not deal with the health plan renewals and other issues related to offering a group plan. Shopping for health insurance may be intimidating for the employee as it historically has been provided by the employer.

Terms such as deductible, out-of-pocket expense, co-insurance and copays, PPO, HMO, HSA, embedded accumulation, on and off market, subsidy, bronze, silver, gold, catastrophic, in network, out of network, may be foreign to the employees. This is where agents and brokers can provide the necessary training, understanding and recommendations to guide the employee to a proper plan that best suits their situation. The company’s staff no longer would have to deal with these complexities.

Some employers may be perfectly happy with their current situation with respect to their group plans, and others may have reached a point of frustration or a cost ceiling that does not fit their budget. You may have increased deductibles, copays and out-of-pocket levels many times to reduce the premium. Now where do you go to offset the next round of increases?

Again, employers may wish they could focus and direct their resources toward making products or providing services to their client base and not deal with the dynamic changes of health care.

These are changing times and a new line of thought on health insurance could make for happier employees with their own customized plans and afford more profits for employee compensation, business operations growth and development as well as controlling or reducing overall health care costs.