Five Ways to Cut your Health Insurance Costs

February 19, 2009



Nearly one-third of all health-insurance premiums increased to 30
percent or more. At that rate, the average cost of health insurance
per employee will exceed $3,000. Seventy-three percent of senior
executives believe health-care costs will continue to increase 20
percent or more each year for the next three years. The message
here is clear: If you haven’t already gotten serious about cutting
your company’s health-insurance costs, now is the time. It can be
done. The first thing you should do is learn how the system
works–or doesn’t work. Most small employers spend fewer than four
hours a year thinking about their company health plans. Learn what
your options are. Your insurance agent can help you shop for
cheaper plans. But don’t stop there. Compare plan benefits,
insurance-company records, and service guarantees.

Consider Blue Cross and Blue Shield plans and HMOs
(health-maintenance organizations), even if your agent doesn’t
handle them. The Blues in some areas, offer clear advantages to
small companies. Experts regard HMOs as the best buys in health
care. Find out if your company is eligible for new, low-cost health
insurance plans now available in five states. In addition,
foundation-funded pilot projects in several parts of the country
are demonstrating that it is possible to cut health-coverage costs
30 to 40 percent. In short, health insurance isn’t as simple as it
used to be. And the pace of change is accelerating, offering new
hope for a truce in the business battle with exploding health-care
costs. The next couple of years present as much potential for
change as at any time in the past 20 years. You can be part of that
change by putting at least some of the following 5 ideas to work
for your company.

1) Increase Cost Sharing By Employees This recommendation is at the
top of every consultant’s list. Small companies tend to pay far
more of their workers’ total health-care bill than large companies
do. Yet research shows that insulating employees from the costs of
care encourages unnecessary use of health services. Fifty-two
percent of the companies responding to the Nation’s Business health
survey said they pay 100 percent of their employees’
health-insurance premiums. But 45 percent said they intended to
implement or increase employee contributions to these premiums. An
equal number said they plan to increase employee deductibles.
Insurance companies first attached $100 deductibles to
major-medical plans in the early 1950s. But 40 percent of employers
still set deductibles at $100 or less. Raising a $100 deductible to
$250 would cut premium costs for single coverage by about 11
percent. A $500 deductible would cut costs by about one-fourth. A
$1,000 deductible would save about one-third.

2) Allow Employees To Pay For Health Premiums With Tax-Free Dollars
Set up a so-called flexible spending account, which allows your
employees to pay their share of health-insurance premiums and
un-reimbursed health-care expenses with pretax dollars. A flexible
spending account could save employees 20 cents to 35 cents on the
dollar, because state and federal income taxes and Social Security
taxes are not imposed. Moreover, the company saves by reducing the
employee’s base salary on which it pays Social Security and other
taxes. Hire an outside payroll accounting firm to handle the
paperwork. You can pay the service fee and still come out with a
net savings. The monthly administration fee would run between $2
and $5 per employee.

3) Transfer High-Risk Employees To The State’s High-Risk Pool
Insurance premiums soar whenever someone in a small-group plan
becomes very ill–with cancer or heart disease, for example. As an
employer, you should explore the possibility of moving employees
with serious health problems into a state high-risk pool and then
negotiating a lower premium for the healthy members of your group.

4) Switches To An Open-Enrollment Blue Cross And Blue Shield Plan
Blue Cross and Blue Shield plans operate as de facto high-risk
pools in a number of states by providing “open enrollment” periods
during which any group can buy insurance. Among the 74 Blue Cross
and Blue Shield organizations nationwide, 21 offer open enrollment.
All the Blues once used community rating to set premium levels. But
that began to change in the 1960s when commercial insurers started
to lure away firms with low risks by offering them cheaper health
insurance.

5) Replace Your Traditional Health Plan With An HMO Unlike
traditional health insurance, HMOs cover all medical needs,
including routine preventive care, for a flat monthly fee that
typically is less expensive than traditional health insurance.
Moreover, two types of HMOs, the staff and the group models, have
proven to be more effective at controlling costs than any other
form of health-care delivery. Staff models employ physicians
directly and put them on salary.

DISCLAIMER: This information is for educational and informational
purposes only. The content is not intended to be a substitute for
professional advice. Always seek the advice of a licensed Insurance
Agent or Broker with any questions you may have regarding any
Insurance Matter.

Five Ways to Cut your Health Insurance Costs

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Know your Health Insurance Rights during a Lay-off

February 9, 2009



Providing health coverage for laid-off workers is good health
policy for all employers. This can take away some of the sting from
being out of work and COBRA payments. Tax credits for laid-off
workers are also available and can be a valuable element of a
phased-in national strategy to assist the uninsured. Laid-off
workers can receive effective, temporary “bridge” coverage between
jobs using the COBRA law. These benefits will be the same as with
their employer but at a higher cost. There are advantages in
targeting this on this group for helping. Providing health
insurance to persons becoming unemployed will help keep these
people on the map so to speak. One of the biggest problems with
American health insurance after unemployment is the disappearance
of it. Most uninsured Americans had health coverage at some recent
point but then lost it, typically because of unemployment, or some
other reasons, such as aging out of a parent’s policy or wage
in-creases that exceed public program limits.

Targeting these people for aid or assistance in lower premium
insurance will help reduce the number of uninsured. And as
suggested by many American public opinion polls, there is more than
90 percent public support for helping laid-off workers. This
addresses an important worry in the 165 million Americans under age
65 who have employer-based insurance. They too are afraid that a
pink slip could end their health insurance. Helping laid-off
workers obtain health coverage, regard-Less of the cause of their
unemployment, would also remedy an inequity created by the Trade
Act. It is hard to justify covering unemployed workers whose
lay-offs result from foreign competition while denying help to
equally needy and hard-working Americans who are laid-off for other
reasons.

Moreover, a simple tax credit targeted to those who lose who lose
their jobs due to layoff would not risk unraveling or jacking up an
employer’s group coverage. Some policymakers fear that such tax
credits to assist the employed uninsured could cause some
businesses to drop coverage. Also young, healthy workers could take
up credits, leaving employers responsible for the higher-cost group
left behind. If credits were limited to laid-off workers and not
include working persons refusing health care plans, this would be
anything to worry about. One national survey found that 52 percent
of uninsured adults lost health coverage because they or a spouse
lost their job. No other single cause of insurance loss was
re-ported by more than 12 percent of uninsured adults. The only
thing these people have to turn to is COBRA, which when unemployed
can sometimes be impossible to pay for.

The federal Consolidated Omnibus Budget Reconciliation Act (COBRA)
is for workers who lost health benefits through voluntary or
involuntary job loss, reduction in work hours, or transition
between jobs. This gives them the right to continue group health
benefits through their current plan. COBRA requires that employers
with 20 or more employees that offer group health plans must offer
a temporary extension of health benefits. Under COBRA, employees,
their spouses and dependent children are eligible to continue
coverage for up to 18 months following lay-off or reduction in work
hours. Employers are not required to pay for continuing coverage as
the did when the person was employed with the company. The workers
are responsible for the full price of the plan and may be required
to pay up to 102% of the cost of the health plan

If your spouse or domestic partner is covered under employer-based
coverage you and your dependent children may be eligible through
that plan’s dependent coverage. Again, employers are not required
to pay for such coverage, and you may be required to pay the full
cost of the health plan. For more information, contact your spouse
or domestic partner’s employer. The only problem with this option
can be that you may have to wait till open enrollment to be able to
change the policy. Some employers will only let changes to be made
if there is a birth, death, divorce or marriage taken place. Other
than that most have to wait 12-18 months for the next opportunity
to add new people or change their benefits.

Private Health Insurance may be purchased by anyone directly from
any company that deals with health plans. However, individual
policies are generally priced higher than those through a group
plan, and insurers can ask about your health history and may
exclude “preexisting medical conditions,” deny coverage, or charge
less than healthy people a higher rate than they charge healthy
people. For more information contact the health plan or insurance
broker of your choice listed in the Yellow Pages under “Health
Plans” and “Insurance.” When deciding on a policy it is best to
speak directly with an agent. Make sure you get several different
opinions before deciding on a plan.

Know your Health Insurance Rights during a Lay-off

DISCLAIMER: This information is for educational and informational
purposes only. The content is not intended to be a substitute for
professional advice. Always seek the advice of a licensed Insurance
Agent or Broker with any questions you may have regarding any
Insurance Matter.