The Health Insurance Hurricane of 2005

You could call it the perfect storm.  The cost of health insurance isn’t just about how much you pay each month.  The truth is that the rising cost of health insurance affects you in unexpected ways.  In May 2004, the Washington Post reported that the Ford Motor Company’s costs for employee health insurance added $1000 to the final price of every Ford vehicle purchased in the US,[1] and research from the Kaiser Family Foundation indicates that nearly half of surveyed employers plan on raising employee contributions for health benefits in the coming year.[2]  Small businesses everywhere are reeling from the health care crisis; employers continually struggle with providing benefits in order to attract and retain the best and the brightest employees.  The catch-22 is how to pay for these benefits without going out of business.  Whether you’re self-employed, an employer or an employee, don’t be surprised if your health insurance costs increase in the new year.

Although you can’t control the weather in this perfect storm, you can still learn to navigate these turbulent waters.  By making informed health insurance decisions, you can trim your monthly costs.  Here are three suggestions:

Evaluate your health insurance options

The easiest way to reduce monthly premiums is to adjust your plan’s deductible.  The term, ‘deductible,’ refers to the amount a patient is required to pay out-of-pocket for healthcare before any health insurance coverage kicks in.  High-deductible plans will protect you and your employees from serious financial trouble in case of injury or illness, while protecting your bottom line at the same time.   Employees may have concerns about a high deductible health plan but you can help them cover the costs in other ways. Perhaps a salary increase to help offset the deductible cost makes sense for you and your employees.  Many employees do not use all or even most of the benefits provided through a comprehensive, employer-sponsored health plan, so your employees may actually benefit financially if you offer a high deductible plan coupled with a small salary increase.

Consider the individual and family health insurance market

As an employer, if you’ve found that you just can’t afford the group health insurance plans available in your area, consider working with your employees to help them find individual and family coverage in the private market.  Many employers provide their employees with an “allowance” to find health insurance on their own.  If the current trend continues, it may become increasingly common for employers, both large and small, to get out of the health benefits business entirely.  You may be surprised to find that employees might prefer to have more control in making their own health insurance decisions.  Don’t throw them out in the cold, however; get online and research a few options for them through a health insurance broker with access to quotes from a variety of insurance carriers.

Covering your employee’s dependents can be an expensive proposition.  Even if you want to continue providing more comprehensive group coverage for your employees, you may need to reconsider the coverage you provide for their dependents.  You can adjust the amount you contribute for dependent coverage, or assist them in finding an outside solution through an individual and family plan.  Again, resources are available in the individual health insurance market.  Online or offline brokers can provide a variety of quotes from different carriers and you can help fund these costs through an allowance or a salary increase.  Some workers may prefer to be in the driver’s seat, receiving compensation in lieu of family health benefits could be a win-win for you and your employees.

If this health insurance storm has you sending out a distress call, take heart.  Help is close at hand.  If you’re considering any of these options, make sure to work with a licensed, reputable health insurance agent, whether online or off.  Your safe harbor may be right around the corner.