Insurance pitfalls

You may think you’re providing employees a cost-effective health insurance plan, but if you haven’t thoroughly investigated all the options, think again.

Sue Connor, vice president with Berwanger Overmyer Associates, says it’s surprising how many employers don’t take full advantage of laws and insurance plans that can save money or offer additional benefits to employees.

One of these is a Section 125 plan. Under Section 125 of the Internal Revenue Code, employers can deduct insurance premiums from an employee’s paycheck before income taxes are calculated.

“Using a Section 125 plan can save both the employee and employer up to 30 percent of the premium if the employer is matching the employee’s contribution,” Connor says.

Employers can create a Section 125 plan for the health insurance premium only, flexible spending accounts (pre-tax dollars deposited into an account typically used to cover out-of-pocket medical costs) or for the full employer benefit plan.

Another often-overlooked option is the use of voluntary benefits to round out an insurance program. Voluntary benefits are typically long-term care policies or disability insurance. Employees pay the full premium, which is less than it would be if they bought it individually, thanks to the employer’s group discount.

“Employers are often surprised how many employees take advantage of voluntary plans,” Connor says.

These plans are attractive to employees because they can be continued — at the group rate — after leaving the employer.

“It’s a win-win situation, and it doesn’t cost the employer anything except the time it takes to set it up,” says Connor.

Other employers make the mistake of not taking full advantage of the employer-insurance broker relationship.

“The insurance broker can be an advocate for the employer in many ways,” Connor says. “The broker can help keep the program in balance.”

The broker can do a thorough analysis of the company’s plan to make sure it meets the needs and budget of the employer and employees.

“Employers are not always considering every aspect when choosing a plan,” Connor says. “Price, plan design and service should all be taken into account when developing a program.”

And, she says, the broker can also help keep the company in compliance with plan regulations and assist with claims. How to reach: Berwanger Overmyer Associates, (614) 457-7000 or