To Your Health

Take care of your employees and your business by providing a health care plan. There are affordable options available.

Consider this: From 1999 to 2006, the number of insured workers remained stable, fluctuating from 52 percent to 53 percent and back. From year to year, the percentage of workers who had to pay for some or all of their health insurance costs went from 67 percent to 75 percent. What was once a real benefit, paid for by the company, has turned into an opportunity to join an existing insurance group with the cost burden being transferred to the insured. While no one can argue that this is wholly wrong, it does demonstrate that the cost of health insurance—or of insurance in general—is rising quickly. It is simple math: We have an aging population and as we age, we require more medical services. That wouldn’t be an issue if folks died at some point in their sixties, but on the whole we are living far longer and that is a deadly combination for the health insurance business to deal with.

To Insure or Not to Insure

Unless negotiated agreements between management and organized labor dictate otherwise, you are under no obligation to offer health insurance to your employees, which would put you in the company of 48 percent of the business owners out there. Yes, only 52 percent of American workers have health insurance. There are a number of reasons for this, employment status for one. If you use independent contractors or hire only part time, no one actually expects you to cover them. Another reason is the cost. Some companies, Wal-Mart for example, do offer coverage. However, they pay such low wages and demand such high prices for that insurance that it is simply out of reach for the majority of their employees. Still, full-time or part-time, they are your employees and the decision to insure or not, and to what extent, rests entirely with you.

On the other hand, there are a number of really compelling reasons to consider offering health insurance for your company. There are tax benefits—the costs you pay are, generally, 100 percent deductible as business expenses—as well as real benefits to your recruitment efforts and your ability to retain good employees. Offering insurance coverage also has a beneficial effect on issues of absenteeism, morale, office atmosphere and hiring costs. The results of a 2002 survey, the Blue Cross and Blue Shield Association Analysis of 2002 Small Employer Health Benefits Survey, sponsored by the Blue Cross and Blue Shield Association (BCBSA), the Employee Benefit Research Institute (EBRI), and the Consumer Health Education Council (CHEC) confirmed these findings:

Six Questions for the Insurance Companies

1 What is the coverage?
Seems straightforward, but have you considered what is actually covered by the plan you are looking at? If it doesn’t offer what is important to you and your employees, then it is no bargain. Move on to the next plan.

2 Where can members get care?
Is there a network of providers, clinics and hospitals—such as with a managed care plan—or can members go where they like?

3 What are the charges at the time of service?
Is there a co-pay or co-insurance, if so, how much will it cost each time someone sees
a doctor?

4 Can members choose their own coverage?
Is there more than a single plan or benefit package to choose from, such as a choice between PPO and HMO coverage? The more choices
you and your employees have, the better.

5 How good is the insurer?
Some are better than others, and some are absolute horror stories, so do your homework. What kind of customer service do they offer? How likely is it that they will drop a member after they make a claim? What is the quality of the care they provide? How often do they refuse payment? Are they solvent?

6 What is it going to cost?
What is the monthly premium? All things being equal, that
will likely be the deciding factor.

* 78 percent of employers said health insurance coverage increased loyalty and decreased turnover.
* 75 percent of employers said health insurance coverage helped employee recruitment.
* 64 percent of employers said health insurance coverage increased productivity.
* 62 percent of employers said employees demanded or expected health insurance.
* 58 percent of employers said health insurance coverage reduced absenteeism by keeping employees healthy.

Two-thirds of small employers that offer coverage also believe it has had an impact on the overall success of their business.

The Basics

Health insurance is a proven good deal, but the question is, how do you go about buying it for your business? Before you visit your insurance agent, here are a few basics you need to understand.

Groups. What is a group? A collection of people, right? To the insurance industry, the word group is more than that. Yes, it is a collection of people, but it represents a pooling of risk. In other words, groups are a way of spreading risk across a number of different individuals. By doing this, insurers can keep the cost associated with that group down, which is reflected in the premiums charged for the coverage. Groups also have other advantages:

* Eligibility. Once a group is established, anyone who joins the organization that started the group is eligible to join in as well.
* No pre-existing conditions. If you are eligible to join the group by your association with the organization, that is all that is required. Pre-existing conditions are not taken into account.

These lower premiums and relaxed coverage eligibility are not available to individual policy-holders. Their costs and eligibility for coverage are based on medical history, credit and other personal factors. Still, even groups have their rules regarding eligibility.

Eligibility. The rules here are generally straightforward. To be considered a small employer for insurance purposes, you have to have between two and 50 full-time employees. Typically, owners are counted toward that number, as are partners. Thus, if you are a sole proprietor and you have one employee, or it is just you and your partner, then the two of you can be a group.

Full-Time vs. Part-Time Employees. In general, the same rules apply to each within their specific spheres. If you offer health insurance to one full-time employee, you have to offer it to all full-time employees. If you offer it to one part-time employee, then again, you have to offer it to all of them. However, you can differentiate between the two groups if you like, and only offer it to one and not the other. In that case, you could have all your full-timers insured and none of your part-timers covered.

Children, Spouses & Other Dependents. If the employee is a member of the group, that opens the door for their dependents to join as well. However, unlike the case of the employee, you are not obligated to pay any portion of their insurance premium. You can if you wish to, but you are perfectly free to have the employee pay that portion of the coverage in full.

Costs. Generally, most health plans require that you, as the employer, pay at least 50 percent of the premium for your employees. You can pay more, if you wish, but usually not less. The belief in the industry is that by making this a requirement, more employees overall will join the plan, not simply those with health problems. These latter raise the risk associated with the group.

Things to Focus On

There are a number of factors that you will look at when trying to decide on an insurer and a plan, but they boil down to three basic things: benefits, choice and cost. These are the primary factors that you need to keep an eye on when choosing coverage.

Getting the right kind of coverage at the right cost from the right provider is the task facing you when you choose to offer insurance to your employees, while the benefits you will receive in increased productivity, loyalty and morale, will more than make up for the time and effort you will spend.


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