In 2003, the U.S. House of Representatives passed legislation that would establish "association health plans" to let small businesses join together across state lines to buy health insurance as a group, and President Bush has indicated he will sign the bill if it passes the Senate. Under the current legislation the plans wouldn't have to cover costly state mandates, such as diabetes or infertility coverage, which advocates say would help keep premiums low. Critics point out that the plans would preempt all state consumer protection rules. Another potential hazard: Association health plans would be allowed to self-insure. In the past, notes Kofman, some self-insured plans run by business coalitions have become insolvent, putting members on the hook to pay claims. "That could put a small business out of business," she says.
As with all changes to your health insurance, do plenty of homework before joining a pool. Make sure more than one insurance company participates and that the program negotiates over benefits and rates. Find out if the program will intervene on your behalf if you run into problems with your insurer. If the association has kept the same insurer for 10 years, find out why. Some associations endorse a product regardless of whether it's good or from a reputable insurer, Kofman warns, and they may reap financial rewards by getting you to sign up. Make sure the organization is looking out for its members' interests -- and not its own.
8. Outsource it
Many clients are relieved to outsource the headache health care has become.
If you want to hand off all of your human resources hassles -- not just health insurance -- you might consider a professional employer organization, or PEO. Such organizations serve as outsourced human resources departments. For a monthly administrative fee, usually about 1.5% to 3% of your gross payroll, the PEO handles it all -- insurance, benefits, payroll, workers' compensation, and other HR-related services. Like purchasing pools, PEOs aggregate a large number of clients and their employees into a single group, and as a result often command far more favorable health insurance rates than individual companies. ADP TotalSource, a PEO in Miami, for example, has 4,600 clients nationwide, roughly 90% of whom get health benefits through the company. Pooled purchasing power is part of the attraction, says Carlos Rodriguez, ADP's division vice president, but many clients are also relieved to outsource the whole headache that health care has become. "Employers with 20 workers don't want to be worried about plan design or negotiating renewal rates with a carrier every year," he says. "They're looking for a way to do it more efficiently."
About 700 PEOs exist today, and the bulk of their clients are companies with 15 to 75 workers, says Edie Clark, spokesperson for the National Association of Professional Employer Organizations. To find a PEO, visit www.napeo.org.
9. Get healthy
Last year, Standard Process in Palmyra, Wis., took a bold step toward creating a healthier workplace. The company, which makes dietary supplements, replaced the candy bars and potato chips in its vending machines with bags of nuts and low-sugar yogurts. The shift was just the latest step in Standard's eight-year effort to help its 200 employees embrace healthier lifestyles. The program's centerpiece is an annual wellness challenge. At the beginning of each year, employees can get a free on-site physical, complete with glucose screening and bone-density tests. In 2004, 135 employees, or 68% of the work force, signed up. Of those, 60 went on to complete the challenge by meeting 16 out of 19 requirements throughout the year, such as maintaining or lowering their cholesterol level, working out regularly at the on-site fitness center, and not smoking. Each employee who met such goals earned a $500 bonus.
Standard will spend $190,000 this year to maintain its wellness program, says director of human resources Scott Alcorn, so it zealously tracks ROI. The company, which self-insures, says that its annual costs for prescription drug claims dropped 1.5% in 2004. Its overall medical spending, meanwhile, rose 4.2%. Nationwide, overall spending on health care rose 7.5% and prescription drugs 8.8% in the first half of 2004, according to the Center for Studying Health System Change and the Employee Benefit Research Institute.
Experts caution that a comprehensive wellness program like Standard's is a long-term investment and may not make financial sense for an employer with high turnover. (Standard's annual turnover runs a low 8%.) But promoting healthful habits doesn't have to mean a huge financial outlay. Offer discounts to a local health club, start a walking club in the office, serve salads instead of slices of greasy pizza at company lunches. Factor in some of the cost-cutting ideas that are mentioned above, and who knows? Maybe next year's renewal rates won't make you sick to your stomach.
