If business owners are facing a possible increase of 166 percent 10 years from now, what can they do to address this now?
Companies are reacting to these increases by lowering the portion of the premium that they are paying as well as increasing deductibles and co-pays to try to bring down the cost.
According to a Kaiser Family Foundation Survey of companies with 200 employees or less, the percentage of covered workers enrolled in a plan with a general annual deductible of $1,000 or more for single coverage is now 40 percent, compared to only 16 percent in 2006.
How can employers keep the cost of health benefits down during these tough times?
Partner with an HRO to take advantage of group buying power.
Through the buying power of an HRO, businesses that may otherwise be too small to obtain competitive pricing for health care can now get the same buying power as large companies. When an employer joins an HRO and bands together with other companies, the number of the insured employees increases exponentially to hundreds or thousands of employees. The buying power now lies in the hands of a much bigger pool, which, to insurance carriers, is more attractive. The pricing may be more competitive through an HRO than on a stand-alone basis since the insurance is bought in volume at a reduced rate.
Look into flexible spending accounts through an HRO.
A Kaiser Family Foundation Health Study last year indicated that an overwhelming number of small businesses don’t offer flexible spending accounts or even the pre-tax premium option. If the monthly health insurance premium for an employee is $1,000 and the employer pays 50 percent, the employee can make his or her $500 monthly payment using pre-tax dollars instead of after-tax dollars, thereby avoiding being taxed on this amount.
Both the employer and the employee save payroll tax dollars by utilizing flexible spending accounts, which apply pre-tax dollars toward employee-chosen benefits, including deductible payments, adult and child day care, eye/vision care and more.
By using these options, both the company and the employees save a considerable amount of money where, in this economy, every penny counts.
Rob Wilson is president of Employco Group Inc., a division of The Wilson Companies, which provides human resources outsourcing, staffing and insurance for 400 small and medium-sized Midwest companies. Reach him at (630) 286-7345 or [email protected].