Bob Priest, owner of Burr Roofing, Siding & Windows, in Darien, Conn., hadhis new salesman all but hired. The prospective employee, a married manin his late 50s, would be working for straight commission and paying his owninsurances. Then, Priest says, the candidate made some calls and found thathealth insurance for him and his wife would cost $1,900 per month. Thedeal was off.
“It wasn't the concept of paying for himself,” Priest says. “Itwas the price. He said to me: ‘I know I'm going to make more moneyhere, but I don't see how I'm going to come out ahead' paying an additional $22,800 peryear for health insurance.”
Up, Up, Up Health insurance is likely the most costly benefit your company offers. Andits cost is increasing. A September report issued by the Kaiser Family Foundationshowed premiums rising 7.7% in 2006, twice as fast as wages. And thatfigure is modest compared with the double-digit increases of a few yearsback. What can you do?
- Call your broker and negotiate.Cost increases may come on official stationery, but that doesn't mean you can'tappeal or contest them. “You could call your broker and tell himto ask for a reconsideration of the premiums,” suggests Paul Fronstin, directorof the health research and education program for the Employee BenefitResearch Institute in Washington, D.C. “Sometimes they will dothat.”
- Ask employees to share some of the cost.Jeff Petrucci, owner of Bloomfield Construction, a replacement and remodelingcompany in Bloomfield Hills, Mich., remembers the 20% premium increase hereceived in 2002. Before that, his company had paid 100% of its employees' healthinsurance premiums. But when the increase came in, the owner felt itwas time to ask employees to share costs.
“I typed a memo explaining it,” Petrucci says. He asked employeesto pay 15% of the premium, and explained that it was because of the costincrease he'd received. “I didn't have to argue with anybody,” hesays. “They were right there.” That was four years ago, andthe employee contribution remains at 15%.
- Adjust within your plan to hold the line on costs.Raising deductibles and co-pays just slightly — from a $200 toa $300 deductible, or from a $10 to a $15 physician visitco-pay — allows you to hold onto your current premium cost “withouthaving to walk away from the network and the payment/provider relationship,” Fronstinsays.
- Switch plans.Cris Keeter, president of All States Windows & Siding in Wichita, Kan., hasswitched providers three times since he started his company 15 years ago. Hesays he is perfectly satisfied with his current provider, Blue Cross/BlueShield of Kansas. But come renewal time, “we get quotes and areopen to different companies.” Keeping an eye on possible alternativeskeeps your insurer from taking your business for granted. Keeter says BC/BSof Kansas works with his company to help hold costs down.
Bear the Burden So how much of the burden should you ask employees to share? John Gabel, vicepresident of the Center for Studying Health System Change, suggeststhat it should not be much if employees don't earn much. “Lower-incomeworkers should not spend more than 6% of their income out-of-pocket forpremiums and deductibles,” he says. Asking them to pay more defeats thepurpose of the benefit.
Today, fewer employers offer insurance. According to the Kaiser study, 65% ofemployers offered health insurance five years ago, compared with 60% today. Thereason? Cost. “The price of health insurance is growingfar more rapidly than our ability to pay for it,” Gabel points out. “AndI mean both employer and employee. So, fewer employers are offeringit — or, if they do, they offer it to fewer people.”
But for most home improvement contractors and small businesses generally, healthinsurance is a benefit employees hold dear and usually expect. Which iswhy it's wise to explain not just how the system works but what it coststhe company. Petrucci, who began offering health insurance when he had twoemployees, says the agony and expense of not offering health insurance easilyoutweighs its cost.
“I want to keep the right people so I don't have to constantly be retraining,” hesays.