Nov 17th 2009
Healthcare rates are on the rise. We see it in the news, we read about it in the papers…..it’s everywhere. With renewal season upon us, and rates sky high, what can we do to alleviate some of the pressure? How can we be savvy purchasers?
Start researching plans about 3 months before your renewal. Survey your employees. Understand what benefits your employees use versus what they say they want. Employees only appreciate what they use. Your employees are a valuable source of information.
Review your current plan. Why was this plan chosen, and how is it being utilized? Are there other options to the plan? What about FSA, HSA or HRA, as these may be a consideration.
In a Health Reimbursement Arrangement (HRA), self insuring a copay or a deductible for rarely used or expensive benefits reduces premiums and allows reimbursement to employees who use the benefit. HRAs allow an employer to deduct payments for unreimbursed medical expenses. They also allow the employer to decide what expenses will be eligible for reimbursement. The employer only has to pay if a claim is incurred. Unused funds may be carried over year to year at the election of the employer.
Health Savings Accounts (HSA) require high deductible health plans that eliminate all first dollar benefits, meaning nothing is covered until the deductible is met. Copayment plans are allowed but services subject to a copayment (except preventative care) must apply to the deductible and all copayments must apply to out of pocket maximums. The individual owns the account and immediately owns any contributions made to it.
Flexible Savings Accounts (FSA) are typically funded by the employees. They can be an addition to any type of health plan arrangement. Employees decide what they would like to contribute on a pretax basis. Expenses must be incurred within the plan year of the contribution. FSAs have a “use it or lose it” rule which means any unused funds may not be carried over into the next plan year, and will be forfeited.
Speak to your current broker about the changes your company may be facing. Your current broker should have experience with employee benefits, plan design and know how to interpret the tax code to save you money.
If the current broker isn’t making the grade, seek another broker. Ask other business owners for a referral. Ask if they are happy with the services they are receiving. Your trade association is also a great place to look for guidance.
Good luck and happy hunting.