New Approach To Healthcare Payments Can Save Thousands Of Dollars
In many states, thanks to changing trends in health insurance premiums, small business owners may save their employees and themselves up to $1,000 per year per employee through a simple but effective new strategy.
According to John Becker, President of Access Insurance Services, in many states, individual policies obtained by each employee and partially funded by the small business employer may be cheaper in the aggregate than maintaining a company sponsored program.
"Our research and experience with hundreds of small business owners leads us to believe that for many, offering to subsidize an individual plan for each employee may prove extremely advantageous," said the head of the Tarrytown, NY, company that offers insurance services throughout the country.
Advantages, Disadvantages
Becker went on to say that there are four reasons for companies to adopt this approach:
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It reduces the overall cost to employers and employees.
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Gives employees wider latitude in choosing a plan provider.
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Offers an approach that enables many families to better match their circumstances with changing healthcare insurance needs.
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The plan is individually maintain and if the employee leaves the company he or she doesn’t lose participation in the plan
Of course, Becker said there are some drawbacks. He cited the following:
- The company loses control of the healthcare program.
- There is no guarantee the employee will use the funds provided by the company for healthcare.
- The funds provided by the company are taxable as part of employee wages.
- Lack of a company healthcare plan may impact employee recruitment, retention.
- There could be some jealousy on the part of some employees who may need to pay higher premiums due to existing health conditions.
- Initial resistance from employees who may perceive that they are losing benefits.
- Some employees may not be able to obtain individual insurance due to pre-existing conditions such as diabetes
Becker argues, and other healthcare experts agree, that the nation is moving towards having individuals be more involved with choosing healthcare options.
Says Greg Scanlon of the Consumers For Healthcare Choices, "many individuals are taking charge of their healthcare activities and there is a definite trend towards more individual purchasing of healthcare coverage."
"If this trend continues, and we expect it will, then providing financial incentives to employees makes more sense, particularly for smaller companies," he added.
For a detailed list of the states where this approach is most applicable, go to www.2hsa.com/states.shtml or email jbecker@2hsa.com.
Changing Responsibilities For Healthcare Coverage
Studies by this newsletter and other surveyors indicate that companies are putting more and more of the healthcare cost onto employees. For many, this coverage only lasts while the individual is employed. Once he or she leaves the firm, the coverage only lasts through the COBRA period.
With the advent of Health Savings Accounts, (HSAs) the custodial account is transferable and adding an individual policy would give the individual a total package that will survive termination.
Some human resource executives surveyed by this publication indicate they would be reluctant to take such a tack because of employee resistance.
However, if explained properly, Becker believes this approach will in the long run be highly popular with employees.
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