Regardless if you have 1 employee or 100, small business owners throughout Dutchess County, New York find it extremely difficult to keep up with the rising cost of group health insurance. In order to stay competitive and attract and retain key employees vital to their business growth, employers must offer to their employees, at minimum, access to group health insurance.
In Dutchess County, most small employers try to offer group health insurance and occasionally dental insurance. A very small few offer profit sharing or some form of retirement plan. After you factor in rent, salaries, advertising, supplies, equipment, employee benefits, payroll tax, unemployment insurance, workers compensation and state disability there isn’t always too much left.
It is hard to give an employee a raise of even 2 or 3% when the cost of group health insurance has been experiencing double digit increases for the past 10 plus years.
When the cost of health insurance to cover a family is greater than the average mortgage, we need to do everything possible to try and cut costs.
5 Ways to Help Reduce Health Insurance Premiums:
- Offer a High Deductible Health Plan – You are probably saying “Hey, were already doing that”, it may be true, but how high is your deductible? Remember most insurance plans offered by health insurance companies are actuarially equivalent to each other which helps spread risk over their product portfolios. Otherwise everyone would buy the same plan because it is a better deal than the others. So yes, offering your employees a tremendously high deductible plan can seem scary but unless some of your employees have serious health issues or have a tremendously horrendous year, you should come out ahead.
- Establish a Health Reimbursement Account (HRA) to Fund Your High Deductible Plan – Your company can fund any amount they want towards their employee’s deductible. The key here is to offer a fair amount but not fund the entire deductible and make sure they have to use their money first. If you fund the entire deductible, then the employee has no risk, no skin in the game and will blow through the money you give them quickly. For example, if you have a $6,000 family deductible you could offer to cover $4,000 of the deductible but only after the employee has used $2,000 of their own money. You will be surprised how careful employees are when it comes to spending THEIR MONEY and because of that they may never reach or use the money you have allocated. One of the best parts of an HRA is unless an employee uses the money you allocate for them, the money still belongs to the company.
- Establish a Company Wellness Program – One of my favorite health insurance carriers, MVP Healthcare, has been talking about wellness for the past 15 years and people are finally starting to listen. Statistics show that employees that are engaged in their overall health are more productive, take less sick days and less inclined to excessively use their health insurance. Having generally healthier employees allows you to offer high deductible plans with the lowest premiums and highest deductibles.
- Have a Health Insurance Audit – At Dutchess County Agent we offer (For Free) to take a look at your group benefits package and see where we can save you money. Quite often we find employers offering non-cost effective plans such as PPOs, not carving or classing out employees where applicable and amazingly not sponsoring Section 125 pretax premium plans that save the employees money and reduce the payroll tax of the employer.
- Switch to a Defined Contribution Plan Model – this model works similar to a 401(k) retirement plan where you give a predetermined amount of money to each employee and offer them several plans to choose from. They select the plan that suits them best and they pay for the difference between the actual cost of the health insurance premium and the contribution you are offering.
All of the above ideas can help. What will work best for you depends on your particular company’s needs.
Why Choose Dutchess County Agent?
The answer is simple, PERSONALIZED SERVICE. All brokers have access to the same insurance carriers and products, so in that respect we are all equal. But at Dutchess Count Agent we offer a level of service matched by an incredibly small few.
I always say to new prospective clients “Ask me for a referral from a few of our existing clients”. I let them speak for us. If you are looking for guidance, personalized service and 25 years of experience in the employee benefits field, please give me a call or shoot me an e-mail.
I look forward to hearing from you.