Recently, the Journal of Accountancy website had a good article by Ken Tysiac on how small businesses might be able to slow down the rise in health care costs. As an owner of a small business, I was very interested.
1. Consider a self-insurance plan. Most big companies self-insure for all or part of health care costs of their employees. Insurance companies administer the plans and sometimes reinsure the risks. Insurers are creating self-insurance plans for smaller employers.
2. Consider a defined contribution plan. This works like a 401(k) plan for health insurance. Provide several alternatives for employees on a private exchange and let them choose the coverage that works best for them.
3. Review contracts with vendors. Good advice not just for insurance.
4. Evaluate coverage of dependents and spouses. Among other options, an employer might consider structuring the benefit and costs based on “employee plus one, employee plus two, employee plus three (and so on).” “Employee plus children” and “employee plus family” alternatives do not take into account the total number of dependents.
5. Assess the whole benefits package. If the employer is paying for a non-health care benefit that not many employees are using, it may make sense to drop them and divert the savings to health insurance.
6. Consider wellness strategies. This good idea can be tricky to implement.
7. Communicate better. Make sure that employees are well-informed of their health care options.
My summary above does not address some additional suggestions and ideas in the article. If any of these strategies are interesting to you, contact your insurance adviser. That’s what we’ll be doing.