 Insurance Best Practices
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.
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
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