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INSURANCE

Rebuilding Your Benefits

As healthcare costs set all-time highs, many businesses are looking for alternative ways to offer employee insurance plans.

By Linda Chiles

Forty percent of American companies no longer offer insurance packages. And more than 46 million Americans don't have insurance at all, even though 80 percent of them work. Compounding the issue: Many employees live paycheck to paycheck and can't afford insurance premiums even if given the option.

Such was the challenge for Ratner Cos., the second-largest salon chain in the country, which operates Bubbles and ColorWorks franchises and employs 14,000 stylists.

"We had only 13 percent of our employees utilizing our major medical coverage because of the expense," says Candice Mendenhall, Ratner's senior vice president of human resources.

Better Options
Some companies like Ratner are turning to limited benefit medical plans (LBMP), which represent the fastest-growing segment in the health insurance industry.

LBMPs provide nearly the same coverage as major medical plans with the exception of catastrophic coverage (i.e., long-term, debilitating illnesses) – all at costs both employers and employees can afford. Whereas major medical plan premiums average $308 a month, LBMPs average anywhere from $50 to $150. They are designed to cover the basic medical services: routine doctor visits, in-patient hospital and emergency room visits, intensive care, anesthesia, wellness services, surgical procedures, prescriptions and lab testing.

"After offering limited benefit medical plans, our [insurance] participation rate has grown from 13 percent to 70 percent, and the lower premiums enable the company to pay 100 percent," Mendenhall says.

Evaluating Offerings
Generally, the plan that works for the CEO may not work for the administrative or entry-level employee. So a good first step in evaluating health insurance plans is to segment the employee population based on financial and medical needs, then select plans that best address those varying needs.

LBMPs are best-suited for companies with 50 or more employees, most of whom earn annual household incomes of $50,000 or less. Companies providing insurance coverage to senior employees or retirees may also want to consider this option for those seniors not yet covered by Medicare.

Employees who can't afford coverage for themselves and their dependents may also prefer this option.

Counting the Costs
When assessing insurance costs, it's easy to become preoccupied with the up-front expense of administering plans, but consider that 80 percent of employees view healthcare benefits as a key factor in deciding to join or leave an employer. And the cost of hiring and training a new employee runs anywhere from 25 to 200 percent of his or her annual compensation, according to the American Management Association.

"Choosing a limited benefit medical plan has been a significant competitive advantage for us," Mendenhall says, "when many companies are cutting back on health insurance and raising premiums."

Linda Chiles is senior vice president of claims for Century Healthcare (chctpa.com).