In a perfect world, business owners would possess the ability to fully provide for the health needs of their employees and their families. Unfortunately, we don't live in a perfect world. The rising cost of health care has left many small business employers with the difficult decision of either providing health coverage for their employees or watching helplessly as rising premiums decimate their employees’ bank accounts and their bottom line.
There must be a better way, right?
Well, maybe there is. Before you throw in the towel on health care for your employees, you might want to consider some alternatives to your present health plan.
Managed Care
Many small businesses already take advantage of managed care health coverage for
their employees. But if you currently offer traditional health insurance, managed
care is something to think about. Managed care coverage is typically provided by
an HMO (Health Maintenance Organization) that negotiates with doctors and other
health care providers to reduce costs. Insured employees are restricted in their
choice of health care providers (they must use doctors and providers who are part
of the HMO), but the cost savings to both employer and employee can be substantial.
Self-Insurance
Some employers opt to provide in-house health coverage for their employees. The
upside is that you don't have to continue to pay exorbitant premiums to insurance
companies and HMOs. The downside (and it's a big downside) is that you are
responsible for paying your employee’s health-related expenses when they occur.
Those costs can be hedged through stop-loss insurance that covers expenses over a
certain threshold. Can you cut health costs through self-insurance? Maybe.
But if you decide to do it, just make sure you’re prepared to live up to your part
of the bargain.
Medical Savings Accounts
Medical savings accounts (MSAs) allow employees to set aside a certain portion of
their pay on a pre-tax basis. As long as disbursements are used for approved health
expenses they are not taxed, and unused amounts remain in the account for future
health-related expenses. If you choose to offer MSAs for your employees, do your
research to make sure your plan complies with federal regulations.
Trade Associations
Trade associations usually provide their members with more affordable health care
alternatives than the members could get on their own. They can do this because
their combined size gives them a certain amount of bargaining power with insurance
providers. This is an especially attractive alternative for small businesses who
don't normally realize the per employee savings of larger corporations.
Health Prevention Services
The goal of any employee-sponsored healthcare program should be healthy employees. You can keep your
employees healthy by providing them with a variety of preventative health services. These services can
run the gamut from smoking cessation courses to fitness classes and events. In the long run, these
services will not only save money, but also reduce interruptions in the workplace due to absenteeism
and poor health.
