As healthcare reform works its way through the chambers of the U.S. House and Senate, costs continue to rise for remodeling firms that want to offer insurance for their employees.
The average employer will pay 9 percent more for health coverage for its employees in 2010 than it did this year, according to “Behind the numbers: Medical cost trends for 2010,” a report from the PricewaterhouseCoopers Health Research Institute. That follows increases of similar sizes in 2009 and 2008.
Although it’s difficult to say what reform — if any — will finally emerge from Washington, the challenges of providing health insurance are unlikely to totally disappear. Here are four tips for cutting your healthcare costs.
1. Provide for wellness
|The U.S. Bureau of Labor Statistics’ Consumer Price Index shows that medical cost increases continue to grow much faster than inflation. The CPI uses an index in which 100 equals 1982–1984 averages|
|HSAs and HRAs are rapidly gaining market share as an alternative to traditional health insurance plans.|
Many people put off annual visits to their doctor to avoid paying the co-pay for the office visit. This can lead to more expensive, long-term problems that cost an employer and employee much more. A medical plan that covers annual visits can help eliminate some of those more serious problems.
It’s a growing trend, says Nicole Schmedding, a benefits practice leader at Lockton Affinity, which administers NARI’s insurance program. “That’s when healthcare costs really go up for individuals, when they don’t get those annual exams,” she says.
2. Offer a healthcare savings account
A healthcare savings account is funded by the employee, the employer or both. Contributions to an HSA are tax deductible for both the employee and the employer. Employees can use the money in the account to pay their medical costs. Unused money carries over.
HSAs must be combined with high-deductible health plans that provide lower premiums. HSAs are owned by the employee, so once money is put into the account, it belongs to the employee, even if he or she leaves the company.
Mark Kinsey, president of PKG Insurance Associates, works with remodelers on implementing HSAs. Kinsey says HSAs are especially beneficial to remodelers because many of their employees are young and healthy and have minimal annual healthcare costs.
Employers can choose how much they want to put into each employee’s HSA every year. In fact, some choose to fully fund the deductible and still come out ahead on their healthcare costs, Kinsey says.
3. Consider a health reimbursement account
HRAs are similar to HSAs, except that HRAs are owned and funded by the employer; the money in the account belongs to the employer. HRAs do not have to be combined with a high deductible plan but often are.
Sun Design Remodeling Specialists in Burke, Va., switched to an HRA this year after facing with what would have been a 24 percent increase in costs on its PPO plan. Sun Design opted to combine its HRA with a high-deductible plan while providing employees with a debit card to use until they hit their deductible. Then, full benefits kick in.
The advantage of an HRA over an HSA is that any unused money will be returned to the company at the end of the year, says Sun Design’s director of administration, Sandy Harris. That money can fund next year’s premiums to help keep future costs down.
Visit http://www.bls.gov/opub/cwc/cm20031022ar01p1.htm for more information on HRAs.
4. Expand your insurance options
You can also offer limited medical insurance plans in addition to major medical. Limited-benefit insurance plans have low premiums and offer coverage for regular doctor visits but often have severely limited coverage of more expensive services. While not optimal, it is better than no coverage at all, Lockton Affinity’s Schmedding says.
PKG Insurance Presentation on HSAs
PricewaterhouseCoopers’ Behind the numbers: Medical cost trends for 2010
Will health reform mean fewer employees and more subs?
Employer Health Care Costs Will Rise 9 Percent in 2010