Empowering Employees with Health Insurance Options
By James Nichols
In addition to searching for the lowest priced health insurance options at renewal time, employers need better options to control costs for the long run and keep their employees happy at the same time. As we enter 2008 and presidential candidates debate health insurance proposals, it is important to realize that any legislative proposal would be voted on in 2009 at the earliest and enactment, if any, would not happen until 2010 or beyond.
What are steps that you can take today to give your company better benefits?
Assume your employees can think!
Insurance companies design plans, employers decide on what to offer, and then most employees are given little or no choice in what they get for benefits or what they will pay. Companies with as few as four employees can offer more than one plan to their employees. By offering two or more plans, varying the contribution levels, and having “buy up” options, you can give employees an opportunity to be involved in their benefits. Yes, it means having an employee meeting and possibly taking 20 minutes away from “real work,” but the savings will come from having employees that are more satisfied because they know how to use the plan that they chose for themselves.
Consider incentives for employees who lead healthier lifestyles.
Past claims and future health risks can be taken into account by insurers no matter how large your company is. Obviously there are health conditions over which employees and their dependents have no control, but many conditions are avoidable, and encouraging employees to take action can result in fewer sick days, more productive staff, and lower insurance premiums. You can offer a premium discount for non-smokers, have a weight loss contest, sponsor a discount for joining a gym, and have in-house meetings about healthy lifestyles. Insurance companies have greatly expanded their services to include personal coaches for a variety of conditions including weight loss, nutrition, specific disease control, etc. Don’t think the costs add up? If an employee exercises and changes his diet to control cholesterol instead of taking medications (which can require quarterly diagnostic tests and office visits), the savings could be in excess of $2,000 annually. This will translate into lower claims and therefore, lower insurance premiums.
Offer a consumer-oriented plan!
Americans are the greatest consumers in the world, but American patients rarely get a chance to shop when receiving health care. Copays for office visits, tests, and prescriptions give consumers no reason to ask or care what the provider charges. If you are buying a big screen TV and all the choices were a $200 copay, wouldn’t everyone end up with the 50” HD TV, even if they only watched television once a week?
Lasik surgery prices have dropped over 30% in the last several years because of competition and price shopping by consumers. This price reduction has happened even while quality has improved. Similar price drops and quality of care improvements have occurred throughout the cosmetic surgery industry. Many new health insurance plans have been designed to encourage consumers to shop. The most prominent of these plans are High Deductible Health Plans (HDHPs) coupled with Health Savings Accounts (HSAs). The federal government has given serious tax advantages to these plans that must have a minimum deductible of $1,100 for individuals and $2,200 for families. Preventative care is covered from the first dollar, but everything else must meet the deductible first.
By having a plan with a deductible instead of with copays, people are encouraged to shop for prescriptions and think for themselves. Earlier this year Walmart announced a plan to sell a large number of generic drugs at low prices - only $4 for a one-month supply! It wasn’t long before Target matched the Walmart pricing and expanded the list of drugs available for only $4. Amazingly, Publix Supermarkets now offers seven different antibiotics for free. No strings attached for new or existing customers, and no limit on the number of prescriptions a consumer can fill. And the drugs are not low volume sellers. The free antibiotics accounted for almost 50% of the generic, pediatric prescriptions filled at Publix in 2006.
To encourage adoption of these plans, the federal government allows pre-tax contributions to health savings accounts (HSAs). Individuals can contribute up to $2,900 and families can contribute a maximum of $5800 annually. The money grows tax free, can be invested similarly to an IRA and can be used to pay for most medical, dental, and vision expenses. HSAs are owned by the employees with no time limit on spending the money and the account is theirs to keep if they change jobs.
Don’t Accept the Status Quo.
Over the past year most carriers have introduced innovative new plan designs. Many companies now offer basic plans that appeal to younger workers, some have reduced participation requirements and most have expanded the ability of employers to offer multiple plans. With all of these changes it is imperative that you or your agent thoroughly review the alternatives available to your company at renewal time.
About the Author
James founded Nichols Insurance Associates, Inc. in 2001. Previously, he was president of the largest Blue Cross Blue Shield general agency in Florida. In 2005 Nichols Insurance was recognized as the number one United Healthcare Legacy Agency out of 34,000 agencies nationwide. Nichols Insurance is also a member of the BlueCross BlueShield Diamond Club, Humana Leaders Club, and AETNA President’s Club. You can reach Jim at 727-723-1111