I asked Tina Piccinnini of Coastal Financial Group how employers can reduce their healthcare costs. Her answers are below. If you want more information, please email Tina or call her at (973) 952-0300 x119
What are simple things can employers do to reduce their healthcare costs?
- Have 5 different plans for 5 employees: Most employers I speak with are always surprised that you can really tailor the health insurance plans specific to their employees. For example, a group that has 5 employees can have 5 different plans. The HMO plan that works well for one person, may not work for someone else, and that’s ok. You can set up the insurance to really customize the coverage that best fits the needs of each employee. Generally, a younger person would not take a lot of medicine, so give that employee a lesser prescription plan at a cheaper cost and each employee wins.
- Define your contribution: Any employer knows that by law, he is required to contribute a percentage of the premium for each employee. What works well for employers is having a defined contribution so he will know exactly what his cost is each month. For example: The employer can say, I am going to contribute $300 a month for the cost of healthcare. So, I will show 3 or 4 different plans, and the employee can choose which plan works well for them. So, if employee A chooses a plan that costs $320 a month, the employee only has to contribute $20 a month. If employee B wants a plan that costs $400 a month, he will pay $100. This works well for the employer because he knows exactly what his cost is each month and can set his budget accordingly. This is especially important right now with a slow economy.
- Reconsider prescription coverage: A big portion of the premium is to cover the prescription coverage. Many of the insurance companies have come out with plans with either no prescription coverage or a discounted prescription plan. These types of plans can lower the rates dramatically and should be considered as an option for an employee who is not taking monthly maintenance medications.
- Pay for what you use: Many people (myself included!) are used to the days of having health insurance cover everything at 100%. While those plans exist, they are not generally cost effective. We all need to look at options that could possibly include a higher copayment, or a deductible specifically for hospital stays. Studies have shown that on a group with 10 employees, only 1 will use the hospital benefits. So, why pay for something you are not using?
- Don’t wait for your anniversary: One of the most important things I can stress right now is this, and not a lot of people know this, if you need to reduce costs now, and you did not make a change to your plan on your anniversary date, the insurers will generally allow an off-cycle benefit change to lower the cost right now. Also, you can change your plan from company to company at any time (you don’t need to wait until your anniversary date). You will not be subject to a pre-existing condition clause and you can potentially save money.
- Use a broker (and I not saying this because I am one). Most of my clients are employers with less than 50 employees. I see and hear their struggles daily as they try to make ends meet. A broker generally has access to all of the insurance companies and can look around and find the plans that your doctors and hospitals participate with at a cost that works for you. A broker should always be there to handle any claim, billing or enrollment issues as well so you don’t have to sit on the phone with the insurance company for hours trying to get things done. You are paying a lot of money for your plan, make sure your broker is working for you!