Last year health insurance premiums in the State of New York increased ~ 13%, drastically outpacing inflation which generally speaking was between 3-4%. So as a business owner, how do you retain top talent (or at least decent talent) if you can't provide at least minimal health benefits? If you provide health benefits, how do you manage a 13% increase in premium and keep your business a float?
The answer is very simple... YOUR AGENT!
Health Insurance is very similar to Real Estate in one facet, the long-term success of a transaction is completely dependent on the competency and persistence of the Agent involved. What I mean is this; there are literally hundreds of different health programs that an organization can choose to provide its employees. Health Insurance programs are often over simplified by inexperienced Agents in order to make a sale. This can lead to Thousands of dollars in savings being left on table (Don't get me started with organizations that buy Health Insurance through an Association or Chamber of Commerce, terrible decision). Limiting options to simplify a transaction is a sales tactic. Health Insurance is not simple and should not be sold as such. A good Agent will take the time to find out who the employees are that make up an organization and develop a Health Insurance program accordingly.
I am going to list just a few of the options available that help organizations save money. These options are going to tailored to New York State but most states have similar programs.
- Raise Deductibles
We all want to go to the doctor and pay a $5 co-pay and if you employ an older workforce that frequents the doctor's office this might be the best plan. But if you have a healthy group of employees it makes no sense to keep you deductibles low. I recommend something in the $25-$35 range. This simple, common-sense adjustment can save THOUSANDS of dollars.
- Add a Deductible
By adding a $500-$1,000 deductible to your policy (And adding a Health Savings Account) you can rack up savings. Your employees may have to pay the first $500-$1,000 out of pocket but with a H.S.A. the money is saved pre-tax.
- Health Saving Accounts
Advantages of an H.S.A
- Higher deductibles usually mean easier underwriting and lower premium.
- Tax advantaged savings accounts can cover deductibles and pay for non major medical services like dental and vision.
- Savings balances roll over if they are not used every year.
- Some savings accounts pay competitive interest rates on the balance.
- The savings account balance can be withdrawn at retirement (Medicare Age).
Disadvantages of an H.S.A
- If no money gets contributed to the savings account, a covered person would have a higher deductible to pay before the insurance company will cover medical services! In these cases, a traditional PPO or HMO may be a better option.
- Type of Plan
The classic HMO plan that 80% of small business owners still provide their employees is on the way out. EPO, PPO, and High Deductible PPO plans are often far more cost effective and still offer the quality benefits employees need.
- EPO - An exclusive provider organization (EPO) provides extensive benefits with the freedom to see any physician in-network without a referral. This plan basically cuts out the primary care physician visit to see a specialist.
- PPO - A preferred provider organization (PPO) gives employees the freedom to visit in-network providers without a referral and see non-participating providers if they choose.
- High Deductible PPO - A High-Deductible PPO provides employees with the freedom to see providers in-network without a referral, and visit non-participating providers at an out-of-network benefits level. The higher deductibles mean more affordable premiums.
New York State also has a program called Healthy NY. From the Health NY website "The Healthy NY program is designed to encourage small employers that do not currently provide comprehensive group health insurance coverage to purchase reduced cost coverage for their employees." There are certain criteria for obtaining entrance into this program but once in, the program is good and cheap.
These are just a few of ways to reduce premiums. I highly, can't stress enough, highly recommend you contact an independent health insurance agent to discuss ways to reduce Health Insurance premiums. Yearly review and persistence are the only ways to mitigate the effect of rising premiums!
Guilderland Agency, Inc.