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The Latest Money Saving Group Health Insurance Strategies For California
Employers
By: Todd Rich
What are some the latest Strategies being used by Small Business owners in
California to make their group health insurance premiums more efficient?
1. Health Savings Accounts (HSA)
This is a strategy where the employer buys a health plan with a large
deductible. Typically, these are groups that are coming from a plan with a very
low deductible. Since the higher deductible plans are usually much less money,
the money saved is used to put into the employee's "Health Savings Account." The
money in this account is used by the employee to pay qualified medical expenses.
If it's not used, the money rolls over to the next year. The money belongs to
the employee, even if they leave the company.
2. Health Reimbursement Arrangements (HRA)
This is very similar to the HSA above but a portion of the qualified medical
expenses not covered by the insurance is "pledged" by the employer, that is, the
employer only spends the money, if there is a portion of the bill not paid by
the insurance. This would be more favorable to the employer since on an HSA the
money goes to the employee, whether there are claims or not. The problem with
HRAs is that there are very few carriers that offer them right now.
3. Medical Reimbursement Accounts
This is very similar to HRAs above and extremely flexible. It's otherwise known
as partial self-funding. Employer buys a larger deductible and if the employee
uses up that deductible, the employer pays all or a portion of it, depending on
how a pre-arranged agreement is written. This goes for other expenses not paid
by the insurance. The idea is that the employer self insures the typically
smaller expenses with their own cash, (presumably, the savings in premium
dollars from going to a higher deductible.) The downside to this is that many
carriers prohibit the use of this strategy with their plans. It can be very
effective but make sure you use an experienced third party administrator as
there may be some legal and tax documentation required. Otherwise known as
Section 105.
4. Kaiser.
More and more groups are moving to Kaiser. It is typically, benefit for benefit,
less money than just about every other plan. Kaiser is spending billions on the
future and their quality control is promising.
5. Offering Blue Cross and Kaiser side by side. Blue Cross has a new program
where only five employees need to enroll with Blue Cross. The rest can be with
Kaiser. This is a ground breaking opportunity in flexibility.
6. Blue Cross Elect. Blue Cross has a portfolio called Elect with 16 plans in it
comprised of HMOs, PPOs, and an EPO plan. Each of these plans is priced from low
premiums up to a much higher premium.
The beauty of this program is that Blue Cross allows the employer to "define"
how much premium they are willing to pay towards an employee's cost. For
example, Blue Cross offers a $10, $20, $25, $30, $35, and a $40 copay PPO plan.
The $10 plan is the most expensive of this group.
After viewing all of the premiums for the various plans, the employer can
establish, arbitrarily, which plan they are willing to pay, say the employee
only premium for. In this case, let's say it's the $25 copay plan. The employee
can buy the $25 copay plan and it doesn't cost them anything. However, if they
want the more expensive $10 copay plan, the employer would payroll deduct the
difference in premium costs.
Let's say they have dependents they want to cover but the employer only wants to
pay for the employee only. The employee could take the lesser expensive $40
copay plan, and use a little bit of the savings to help them with the costs of
adding their dependents.
This has been a highly successful program because it gives the employees a
greater number of choices, helping the employees be more definitive in their
costs and needs, and at the same time, allows the employer to more efficiently
define their costs.
This information is time sensitive and can change at anytime. If you have a
question or need more information, please contact me at mail@thestrategyguide.com.
--Todd Rich
About the Author:
Todd Rich is an expert on California Small Group Health Insurance Plans and has
written four books on the subject. To learn more about Todd and his books,
please visit
www.TheStrategyGuide.com/ezines |
