By Blair Cohen, GoHealthInsurance.com
As the cost of health care in the U.S. continues to increase and legislation complicates health plan options, more small-business owners and entrepreneurs are reconsidering whether to offer employee health insurance benefits.
According to a 2011 study by HighRoads, a benefits management firm, 65 percent of employers would drop health care coverage in 2014 if a majority of companies in their industry were to do so.
But with health insurance a key factor in employees’ overall financial portfolios—and because availability of health care has a direct correlation to employee productivity—companies may not want to simply leave employees on their own. Fortunately, there are options that can help ease the burden on employees while still lowering the overall cost of group health plans, including the following:
• Consider high-deductible plans and health savings accounts. With a high-deductible plan and a health savings account (HSA), employees become responsible for more of their health care costs and have an incentive to avoid overspending on the health care plan. And employers are still able to provide health benefits tax-free.
• Join other small businesses or organizations to create a bigger group. Many organizations and associations offer programs for small businesses that want to unite as a larger group for health insurance coverage, which helps spread risk more widely. A larger risk pool could lower costs. Employers can begin to identify options for joining a larger group by contacting their industry’s leading trade associations and their area’s regional business networks.
• Consider a company-branded health insurance portal to make insurance more accessible. Employers that decide to eliminate benefits before 2014 should consider helping their employees find their own coverage. An employee portal can provide a company-branded website where employees can evaluate and select their own coverage depending on their needs, location and budget. Employers can contribute a certain amount every month to go toward employees’ monthly premiums.
• Wait for health care reform solutions. Some employers may wait until 2014 to remove group health benefits. At that time, employees will potentially be able to get health insurance through the new exchanges created by health care reform.
From Group Health to Individual Coverage
For those that decide to eliminate group health plan coverage, it’s best to give employees as much notice as possible and provide them with guidance along the way. Most people know less about health insurance coverage options than they do about their automobile insurance, so offer resources and understand there may be confusion.
Below are some tips to help employees change from a group health plan to an individual plan.
• Provide access to a licensed insurance agent. To ease the transition between group and individual health insurance plans, ask a licensed insurance agent to help employees find a new plan or teach employees about individual health plan options. Health insurance terminology can be complicated and a licensed agent will help explain the terms and coverage options. That can be one of the advantages of using a customized employee portal that offers direct access to licensed agents for every state.
• Explain the differences. There are some important differences between group health insurance and individual plans. If employees are switching to an individual health plan before 2014, there is a risk that they can be denied for pre-existing conditions. In addition, it is an option for many individual health plans to provide specific coverage, such as provisions for maternity and infertility. If dental and vision coverage are important for employees, they need to know that these are most typically only offered as separate policies distinct from an individual major medical plan.
• Give employees plenty of time. It’s important to give employees time to evaluate, select and apply for new coverage before discontinuing a group health plan. It is also important to build in time for coverage approval. This can ensure that employees don't experience coverage gaps that may create financial risk for them.
• Don’t go light on the communication. Make sure that employees are comfortable with the change and understand it. Explain to them why you made the decision to change benefits and that you are going through the same process. Share that you are offering as much information and guidance as you can to make the transition an easy one.
• Suggest the use of tools to manage health care expenses. Individual health plans can bring about new costs. To help employees learn how to manage their health care expenses, sites such as Simplee.com or CakeHealth.com can be very useful.
Every company has to make hard choices from time to time. But choosing to not offer group health insurance doesn’t have to mean that you can’t support employees in their health care needs.
Blair Cohen is a human resources generalist and consumer health insurance expert with www.GoHealthInsurance.com, an online marketplace where consumers can compare health insurance plans and companies.
Build a Bridge to Health Exchanges for Early Retirees, SHRM Online Benefits Discipline, February 2011
Viewpoint: Group Policies vs. Subsidized Individual Coverage: The Impact of Exchanges, SHRM Online Benefits Discipline, April 2010
SHRM Online Benefits DisciplineSHRM Online Health Care Reform Resource Page