The number of companies that
offer group health insurance has
dropped 15 percent in the last five years. In fact, in 2005 there were 46.6
million uninsured Americans and, sadly
enough, this total continues to rise.
Employers struggle to find ways to
retain and attract employees who
want health care coverage. One viable
solution to this problem is limited benefit medical plans (LBMPs), which are
gaining popularity. LBMPs offer companies a way to respond to the vital
need for health coverage and, in turn,
have a positive impact on issues such
as employee retention, productivity
and turnover. Employers have many
difficult challenges when it comes to
running their business, including the
cost of providing benefits.
Smart Business spoke with Craig Pritts,
a sales executive with ChamberChoice,
about LBMPs and how they can help your
company.
What exactly are LBMPs?
LBMPs have evolved since they were
first introduced in the 1980s. The
plans pay a fixed dollar amount for
covered medical services to help meet
the basic health insurance needs of
employees and their families. Today’s
LBMPs help defray the costs for an
employee and family members in several areas, such as outpatient sickness, emergency accident, hospital
confinement, surgical benefits and
prescription drugs. Many plans include wellness benefits, fitness discounts, vision services and online
health information.
LBMPs were initially geared toward
the working uninsured and part-time or
seasonal employees. Early on, they
were most popular with temporary
agencies, fast food chains and smaller
companies. According to a survey conducted by Kaiser Family Foundations
and the Health Research and Educational Trust in 2005, approximately
20 percent of U.S. employers offered LBMPs at that time. This trend has
caught on and gained popularity across
the country. Today, many employers —
large and small across all industries —
offer these plans as a strategy to reduce
costs and retain employees.
What advantages do they offer?
The advantages of LBMPs are numerous. The affordable monthly premiums appeal to employers and employees alike. Employers pay an annual
premium of almost $11,000, on average, for traditional family coverage,
while the premiums for LBMPs are
less than $6,000 a year for a family
plan. LBMPs enable businesses to save
thousands of dollars a year without
eliminating coverage altogether.
Unlike traditional employer-sponsored plans, LBMPs do not require a
significant contribution from the
employer. They also can be offered on
a voluntary basis, which means the
employees pay the full premium
amount. Most employers do, however,
contribute some portion of the monthly
premium.
Two additional advantages associated with most of the LBMPs available
today are low or no minimum participation requirements, and no medical
underwriting. The affordability and
flexibility of these policies and the
fact that they do offer a valuable safety net leads us to believe LBMPs will
continue to grow in popularity.
What variables should be looked at when
considering LBMPs?
Benefit managers and business owners need to look carefully at the provisions of these benefit plans because
they have been created to defray costs,
not to pay for all health care services
entirely. It is very important to note
that LBMPs are not meant to replace
traditional group benefits. They are
designed to provide a means to offer
coverage to the working uninsured.
Are LBMPs being heavily implemented?
According to the Business Journal,
the number of people enrolled in these
types of plans is expected to grow as
much as 20 percent in the next few
years from the more than 1 million
enrolled in 2006. The 2006 Census
Bureau Report stated that 1.3 million
Americans lost their health care coverage in 2005. With statistics like this,
LBMPs may be the answer for an
increasingly growing number of employers and employees.
CRAIG PRITTS is a sales executive with ChamberChoice. Reach him at (412) 456-7253 or [email protected].