04/ 02/ 2008
by Megan Goodchild
How nontraditional health plans can boost access to healthcare
Three years ago, JR Runkel wondered if he was paying too much for health insurance. Of his nine employees at Peoria, Ill.-based Fortner Insurance Agency, seven were under the age of 35 and relatively healthy, so Runkel decided to look at alternatives to the traditional health plan his employees were using. After running some numbers and seeing how much he could save, he set up health savings accounts for his employees—and hasn't looked back.
"The savings are pretty significant," Runkel says. "It was at least a 50 percent savings in monthly costs."
Nontraditional health benefits can be great alternatives for small business owners who want to offer health benefits but can't afford increasingly high health insurance premiums. So if you want to offer coverage but paying high premiums just doesn't make good business sense, get creative and try one of these options:
Health Savings Accounts (HSA): Any individual with a qualified high-deductible health plan can contribute up to $2,900 a year ($5,800 for families) to an HSA. (An HSA must be coupled with a high-deductible health plan.) You pay up to a certain amount for medical expenses with your HSA funds, and once you reach your deductible, your insurance carrier picks up the slack. Runkel paid the initial setup fee and gave each employee $600 to kick-start their HSAs.
Health Reimbursement Arrangements (HRA): HRAs are employer-funded accounts designed to reimburse employees for qualified medical expenses that are paid for out of pocket, such as deductibles, doctor visits and prescription drugs. An HRA must be coupled with a high-deductible health plan and is solely funded by the employer.
Mini-Medical Plans: In addition to having lower costs than traditional health plans, mini-medical plans provide basic coverage for doctor visits, lab work, limited surgery and prescription drugs. There are no major medical benefits or catastrophic coverage, but this type of plan can help you fill the gaps.
Health Insurance Stipends: Consider handing the reins of finding health coverage to your employees. Provide them with the tools and resources they need to find the best coverage for their situation, and then agree to pay a certain percentage (up to an amount) of the plan they choose.
Educating Employees
Buying cheaper health coverage seems like a no-brainer, but the decrease in expense requires an increase in discipline.
"Education is the key," Runkel says. "You need to explain to your employees that they're in charge of their own healthcare dollars, not the insurance company."
You should also keep in mind that the lower prices of alternative health plans are attractive, but money isn't everything. Major medical procedures, like surgery, might cost you more out of pocket than with a traditional plan.
If you're having trouble affording your current health benefits, consult an insurance agent and see what alternatives are available. Runkel says there is probably another option for you. "You just have to sit down and do the math," he says.
