New Approach To Healthcare Payments Can Save Thousands Of Dollars

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In many states, thanks to changing trends in health insurance premiums, small business owners may save their employees and themselves $1,000 per year per employee or more through a simple but effective new strategy.

In many states, thanks to changing trends in health insurance premiums, small business owners may save their employees and themselves $1,000 per year per employee or more through a simple but effective new strategy.

According to John Becker, President of Access Insurance Services, in many states, individual policies obtained by each employee and partially funded by the small business employer may be cheaper in the aggregate than maintaining a company sponsored program.

Studies indicate that companies are putting more and more of the healthcare cost onto employees. For many, this coverage only lasts while the individual is employed. Once he or she leaves the firm, the coverage only lasts through the COBRA period.

“Our research and experience with hundreds of small business owners leads us to believe that for many, offering to subsidize an individual plan for each employee may prove extremely advantageous,” said the head of the Tarrytown, NY, company that offers insurance services throughout the country.

Advantages, Disadvantages

Becker went on to say that there are four reasons for companies to adopt this approach:

  • It reduces the overall cost to employers and employees.
  • Significant savings are possible for dependent coverage.
  • Gives employees wider latitude in choosing a plane provider.
  • The plan is individually maintain and if the employee leaves the company he or she doesn’t lose participation in the plan.

Of course, Becker said there are some drawbacks. He cited the following:

  • The company loses control of the healthcare program.
  • There is no guarantee the employee will use the funds provided by the company for healthcare.
  • The funds provided by the company are taxable as part of employee wages unless a cafeteria plan and HRA plans are also established to reduce the tax impact
  • Lack of a company healthcare plan may impact employee recruitment, retention.
  • Initial resistance from employees who may perceive that they are losing benefits.
  • Initial resistance from employees who may perceive that they are losing benefits.
  • Some employees may not be able to obtain individual insurance due to pre-existing conditions such as diabetes and hence may need to rely upon state health insurance risk pools, if available.
  • Coverage may not be as extensive as company provided plans.

National Trend

Becker argues, and other healthcare experts agree, that the nation is moving towards having individuals be more involved with choosing healthcare options.

Other experts believe the individual option may cause jealousy on the part of some employees who may need to pay higher premiums due to existing health conditions.

Among the states this approach may be most attractive are:

California, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, New Mexico, Ohio. Oklahoma, Oregon. Pennsylvania. South Carolina, Texas, Utah, Virginia, Washington,

Wisconsin.

To learn if this approach will work for your company and where this approach is most applicable, go to http://www.2hsa.com/states.shtml, call 866-HSA4ALL.

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