Looking for ways to reduce insurance costs? Don't just cut
benefits. Marcus Newman, an employee benefits consultant with GCG
Financial in Bannockburn, Illinois, offers these tips for
controlling costs while still giving great benefits:
Increase your deductible and
self-insure the difference. If, for example, you have a
plan with a $500 deductible, increase it to $1,000 to reap a
reduction in premiums, then reimburse employees after the $500
mark. Analyze your claims pattern to make sure this approach will
work for you.
Reward longevity by setting
up a vesting schedule for the company's premium
portion. Start by paying 25 percent of an
individual's coverage, and increase that by 10 percent for each
year of service. If you already pay a higher portion, grandfather
in current employees and apply this policy to new hires.
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Set up a Medical Savings
Account (MSA) with a high deductible. "Often the
premium reduction is so great that the employer can fund the MSA to
a certain extent with the savings," Newman says. MSAs also
give employees incentive to keep their health costs under control.
For more information, go to www.irs.gov/prod/forms_pubs/pubs/p96901.htm.
Whatever you do when it comes to health insurance, Newman
cautions, be sure your program meets all the requirements of the
Employee Retirement Income Security Act (ERISA).
| | That's
Smart:Check your insurance coverage
during Get Smart Week. The National Association of Insurance
Commissioners (NAIC) has designated January 14-18, 2002, the time
to get smart about your coverage and learn what resources state
insurance commissioners provide. Call (816) 842-3600, or visit
www.naic.org for
more information. |
| |
Jacquelyn Lynn is a freelance business writer in Orlando,
Florida.
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Originally published in the January 2002 issue of Entrepreneur Magazine