1. Utilize the tax advantages and premium discounts from a High Deductible Health Plan that is Health Savings Account (HSA) qualified.
When you do the math, the health plan with an HSA always wins. Meaning, you will pay less in premiums for the potential benefits under almost any scenario with an HSA plan. When you compound the cost comparison with say 10 employees, the numbers can be staggering. I recently switched a group with a traditional plan with doctor and prescription copays to a high deductible health plan with an HSA. Their total premium went from just over $60,000 a year to $31,000. When you consider that they are still covered for major medical at about the same out of pocket max, it’s even more impressive.
The power of the HSA account itself is in my opinion, awesome. Consider:
• I believe it’s the only account under the U.S. Tax code where money can be deposited before tax, grow tax deferred and then be withdrawn tax free (if used for qualified medical expenses).
• Your out of pocket maximum for health expenses will be lowered by your marginal tax rate. A $5000 deductible and a 25% marginal tax rate translates to a $3750 deductible when HSA funds are used.
• HSA money always rolls over, follows the employee and can be withdrawn without penalty (only income tax) at age 65.
• HSA accounts can be funded in any amount at any time of the year up to annual maximums.
2. Explore a “Self-Funding” option. In the past, self-funding plans were only for large employers. Now they can be offered for groups of 5 employees or more. Every small group I’ve worked with that has qualified for this plan, has saved considerable premium without sacrificing benefits. Don’t worry about the self-funding label, as a small employer, you will never be liable for paying employee claims.
3. Offer multiple plans. Not every employees needs are the same and one size fits all could result in higher premium costs for the business. Employees can also sometimes feel forced into a plan they don’t feel comfortable with. Some employees are willing to pay more for a richer plan regardless of how inefficient it might be. If it makes them happy, I say give them that option.
4. Make sure employees have skin in the game. If you as the employer are paying 100% of the premium, then your employees will only choose the most expensive plan with the richest benefits. If you pay 100% or a significant percentage of dependent and family coverage, then you will have more families join your plan and a very high monthly profit drainer. You can construct your plan offerings and cost subsidy so employees are naturally steered to the most efficient plan. Don’t be afraid to offer high deductible plans as the primary choice, many of the largest employers are already doing it.
Visit www.grouphealthtn.com to download and complete a census and get a quote for your small group. Or give us a call at 615-376-8899.