Protecting Your Bottom Line

Times have recently been tough and there has been little to be confident about, but things do have a way of turning around for the better. While there are many things that are simply out of our control, there are few things in life that we have complete control over and those are usually the most important. Take your health for example. Even in a time of economic despair, one guarantee is that there is the opportunity to live a healthy life so long as you take control over the things that you can control. If you are a business owner, the health of your employees is something you cannot control but in the end, their health can affect your bottom line. As companies downsize and pinch pennies to stay afloat in the economic slump, health insurance presents a tricky problem for business owners, particularly small business owners.

Even though health benefits have proved to be invaluable to employees and may be a big factor in choosing whether or not to take a job, many employers are rethinking their options or doing away with offering group health insurance altogether in an effort to cut costs.  According to a report by the Kaiser Family Foundation, about 158 million non-elderly Americans are covered by employer-sponsored insurance, making it the leading source of health insurance in the country. In 2008, 63 percent of businesses offered health benefits, which is up 3 percent from 2007 but down 6 percent from 2000. Insurance provider eHealthInsurance says more small business owners are finding individual plans for themselves and their families and encouraging employees to do the same. But because more Americans across the nation are employed by small businesses than large ones, group health insurance isn’t something that should be done away with.

Once reason for companies to participate in group plans is the availability of tax incentives. By being able to deduct 100 percent of the premiums for some health plans and offering group health insurance as part of a total compensation package, businesses may be able to reduce payroll taxes. Employees can also pay their portion of the monthly premium with pre-tax dollars. Once a business decides to enter the health insurance market, though, it’s easy to get lost in all of the options and acronyms, which is why it is recommend that companies seek a licensed broker or agent. These firms are an invaluable tool because they are likely to be working with other businesses with similar problems to yours and know the best options for your company.

“To begin the process, companies should arm themselves with as much information as possible on the Internet’, says Sam Gibbs, vice president of sales for eHealthInsurance. “Some of the most popular plan types are health maintenance organizations, or HMOs, which pair insurance holders with a primary care physician, preferred provider organizations, or PPOs, which have a larger network of health care providers but are generally more expensive than HMOs, and a relatively new option called health savings accounts, or HSAs. This latter option is good for small businesses because it acts as a “401(k) for health expenditures,” Gibbs says. With HSAs, employees purchase their own insurance plans, and employers can contribute pre-tax dollars which can be used to pay for medical expenses or saved for future use.

In 2008, the average employer contribution for health insurance premiums was $9,325 per employee, while the average worker contribution was $3,354, which are up 119 percent and 117 percent from 1999, respectively, according to the Kaiser Family Foundation. Because of this, it is important for companies to look for providers that have stable pricing year after year so employers can plan and budget more accurately, says Margaret Jarvis, a spokeswoman for Blue Cross Blue Shield of Texas. Jarvis recommends choosing a plan with access to a broad, high-quality network of doctors and hospitals because more employees tend to participate in larger programs with more facilities. This, she says, reduces the amount of out-of-network usage and can save the employee money.

Jarvis also says that, in addition to considering plans with disease management programs, which allow employees with diabetes, heart disease and other chronic conditions to manage their health, employers should consider wellness programs, too. “It’s important that employers don’t just consider employees who might be sick,” she says. “Find a plan to put the focus on folks who are healthy, too.” Selecting a plan that includes wellness benefits, such as smoking cessation programs, discounts on gym memberships or weight loss programs, can lead to an adoption of healthier lifestyles across the company, resulting in less sick time, she says.

But because health insurance premiums are rising, many small business owners are more concerned about what’s affordable than what’s best for their companies. “Plans with more benefits can get costly for both the employer and the employee”, says Gibbs, “and company heads should avoid plans with excess coverage by considering the needs of current employees”. Therefore, business owners should survey employees about what benefits are most important to them. “Only get the benefits that make sense for your company,” he says.