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Beating Benefit Costs Back into the Box
How to maintain health coverage without laying off your workforce
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Business New Haven
3/31/2003
By: Mimi Houston
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Your office manager has just come to you with yet another letter from your health insurance carrier. It seems premiums will be going up yet again. The explanation? Not there. You begin to worry about how many letters like this your company can absorb, but what can you do? Besides, isn't everyone dealing with this problem?
Yes, and no. In fact, there are ways you can save money, perhaps a significant amount, even in these times when costs are soaring across the board in the health-care sector. And that doesn't mean you should start handing out those pink slips.
"It makes good business sense to evaluate your health-care plans," says Tom Simses, principal of Ebenefits Group, LLC, a company with branches in Branford, Simsbury and Unionville. Simses' firm manages all health-care benefits including Section 125 plans, life insurance, disability, dental, COBRA, legal insurance and 401(k) programs for any type or size of business, as well as mutual funds, tax deferred annuities and retirement planning for businesses of every size.
"A lot of times companies are just going with the flow," he continues. "They're not dissecting the plan as much as they should. There are so many courses of action you can take to save money. If companies just take the time and realize it's beneficial to them to make some changes."
Simses says he continually hears business owners saying they don't have that time to investigate health-care options that might save them significant sums.
"It just amazes me," he says of when he hears of a company that would rather not explore their health-care options. "They'll say, 'I'm happy; we don't need to evaluate our plan.' But employers don't specialize in this," he explains. "And it's very difficult for them if they don't have benefit managers.
In fact, Simses says, the most significant way an employer can reduce health-care benefit costs without sacrificing actual benefits is to be as informed as possible about all the options that are available to them.
"I understand," he concedes. "They have a thousand other things going on and they don't have time to do all the research. But educating both the employer and the employees is very important. It's no longer the employers that are deciding on the plans, so employees need to be well educated. Employers are now asking their workers for more and more adjustments in their contributions."
And he doesn't mean they're being asked to pay less. That's why everyone needs to feel someone on the benefits team is playing on their side.
"Our clients really perceive us as their employee benefit manager," he explains. "And we encourage them to call us. We sit down and explain the plans to their employees and get the paperwork done."
Simses says the plans themselves are a key place to start. The way each employee's plan is designed can make the difference between keeping your workers on board or handing out pink slip. But even Simses admits this is a timely procedure.
"It is a fact-finding mission," he explains. "There is time involved - up front - but you have to spend the time to make it work. Many businesses are paying too much, because they can't find the time to evaluate their plans or they just keep procrastinating - there are a variety of reasons."
But how much is too much? Because each business is unique, Simses says there are no one-size-fits-all answers to the typical questions.
"Employers ask me all the time, 'What is the right amount that we should be contributing?' But you know, there is no right amount."
Simses says the first step in determining a company's health-care benefit needs involves a free consultation with business owners or office managers. Plans from all available health-care coverage companies are then carefully screened so the right match can be put in place.
"We don't charge for that consultation," he says. "We get our compensation from the business that we write with the carriers.
"We do everything," he adds. "We find the plans, help fill out the forms, process them. It's all time, and employers need to put a dollar amount on that time. If someone has a question about their plan, about billing, if they want to add people to the plan - all the administrative services that employers would normally have to do - we do it all."
And because Simses and others in his company bring a large volume of business to the carriers, they are often able to negotiate big-company discounts for small businesses.
Simses says he hears concerns about rising health-care costs daily, and he and others in his company are experienced at finding all the ins and outs for saving his clients big dollars.
"Even for smaller businesses," he says, "the market has created plans to help them bring down their costs."
Simses stresses the importance of people making educated decisions when it comes to their company plan. So many factors need to be weighed at a time when prices for services are rising relentlessly.
"We've seen office visit co-pays go from $5 to $10 and now $20," he says. "Hospital co-pays have gone from $500 to $1,500, even $2,000. But you have to think about this: How many of your employers are going to go to the hospital? Why should you pay a rich premium if hardly anyone uses it?
"There is usually an option," he explains. "You can get a plan that is palatable for your employees."
Simses says there are trends emerging in the field that employers need to be aware of to be competitive and keep their employees happy.
"There are defined-contribution programs," he explains, "that have a larger upfront deductible - $2,500 to $5,000. The employer takes this on or shares it with the employees. Once that threshold is met, they revert back to managed care plans for the rest of the year. If the total deductible is not used, it rolls over into the next year."
He adds more and more employers will be offering Section 125s, which provide funds to be used for filling in the gaps in coverage that managed care plans have by deducting directly from an employee's payroll-before taxes.
Simses says technology and the Internet will directly affect health care coverage in the very near future, and credits sites like WebMD and its ilk as playing a direct role in educating the public about health concerns they may be dealing with, making a doctor's job easier and more efficient, by treating a more informed patient.
"By the time you get to the doctor," he explains, "you've already educated yourself about the issue so he can spend less time explaining it to you."
Simses says his company's trends reflect the times as well.
"They're coming with technology," he relates. "We design a Web site for each client that gives benefit descriptions, prints out any insurance forms they need - the insurance companies love this."
The site includes a benefits page specific to each employee where they can track, daily, their entire benefits package as well as features like carrier directories that list up-to-date participating doctors.
And, oh yes, speaking of the doctors Simses has good news in that area as well.
"Managed care," he says, "is moving back toward having more decisions made by doctors and not by the insurance companies."
That's one trend in the health care we can all feel better about.
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