Times have gotten tough for small-business owners. By containing your healthcare plan costs, you might help ease some of the economic pressures bearing down on your business.
Health insurance can be emotional. After all, we're talking about your health and, in some cases, maybe even your life. If done right, you achieve the results necessary to not only attract and retain your employees, but also keep your group health insurance plan in place. Oh, and maintain your profitability as well! You can't forget about that.
These three simple tips might help you offer great health care benefits at an affordable price:
Healthcare Savings Tip No.1 - Utilize Small Networks
An insurer's preferred provider network is a list of doctors, hospitals and other healthcare providers who have contracted with the insurer to provide care at discounted rates and handle paperwork with the health insurance company.
Most health insurance companies have both large and small provider networks. The healthcare providers in the smaller networks provide healthcare for deeper discounts than the larger networks. When you opt for the smaller networks, the insurance company passes along those savings to you through reduced insurance premiums.
Savings to the employer for offering the smaller network range from seven to 20 percent depending on the insurance carrier and the nature of the network offered. Keep in mind that your employees might find that the network doesn't include some of their providers. However, if it comes down to using another provider versus not having health insurance, employees usually accept the smaller network. A smaller network still has out-of-network coverage available to the insured, though it might include a higher deductible, greater coinsurance exposure and, potentially, reasonable and customary claim cutbacks.
Healthcare Savings Tip No.2 - Offer HMOs
Health Maintenance Organizations remain valid and worth any employer's consideration even if some of the luster has worn off over the years. HMO plans have the best price point for small business insurance coverage, so it's a great way to save on your healthcare costs.
With an HMO, your employees get medical attention principally from the hospitals, doctors and other providers with which the HMO has a contract. Each employee works with a primary care physician who helps address their medical issues.
While it's a great way to save on your health insurance costs, many employees view HMOs negatively. For years, HMOs have had a reputation for denying medical treatment that would be granted in other coverage types or even offering below-average care. However, don't be swayed by just talk -- look into any HMO you're interested in.
Most HMOs offer excellent medical care, but even still every HMO is different. Do your due diligence on HMOs before making a final decision.It's also good for you, as an employer, to pay for as much of the HMO premium as you can afford. If your employee wants the more traditional plan, then they should be required to pay the difference. This helps further cut company expenses.
Healthcare Savings Tip No.3 - Offer Health Savings Account (HSA) Plans with High Deductibles
You might save the most on small business health care insurance by using HSAs, which must be coupled with a high-deductible insurance health plan (HDHP). HSAs let your employees purchase routine health care services directly by using spending accounts. For example, a routine trip to the doctor's office would be paid for out of an employee's HSA. Non-routine expenses, such as a major health crisis, are covered by traditional insurance after employees meet a deductible.
An HSA savings account is established for each employee through a trustee or custodian. The employer contribution to an HSA account is non-refundable. After making it, you cannot recover it. When employees move to another company, they take their HSA accounts with them. There are no limits to accumulated HSA funds, which are tax exempt and can be invested.
Compared to other types of insurance premiums, your savings with an HDHP for family coverage can average $1,400 per employee per year.
Although your employees may initially be skeptical of an HDHP, after a full explanation they'll generally understand the advantages an HSA account combined with an HDHP. It's truly win-win for both employers and employees. It's good healthcare coverage at an affordable price.
The Bottom Line on Health Insurance
Small business health insurance costs might be skyrocketing out of control, but you can still lower other costs and offer employees excellent insurance coverage. You just need to be smart about it and keep both your employees' well-being and your company's bottom line in focus.
When defining your plans, you should know there's help available to discuss all your options. My firm, SurePayroll, now offers this service to help minimize the stresses involved. Visit SurePayroll Health Insurance at www.spinsurance.com for more details. You don't need to process payroll with us to use the service. It's simply one option out of many. If you have a local insurance broker you trust, they'll almost certainly help you out as well.
I've outlined only a few tips out on how to save on health insurance, but there's many, many more. If you have any others you'd like to share or have questions about ways to save money on small business health insurance, please email me at email@example.com
Last updated: Nov 11, 2008
MICHAEL ALTER is president of SurePayroll, America’s leading online payroll service. He received an MBA from the Harvard Business School and holds a bachelor's degree in economics from Northwestern University. @michaelalter