It's About the Arithmetic! (Guest Post)

Recently, my company had to go into the marketplace to find health insurance coverage for our employees. I discovered the choices for health care coverage for a small business are varied and complex. It occurred to me that many small businesses like ours (including our clients) are struggling with the same decisions and choices. Our current economic climate makes those choices much more critical. It was clear that I needed professional guidance to help our company make smart choices about our health care coverage. Naturally, I turned to my friend and colleague, Maureen Hedges to ask the question: How should a small business approach to health care coverage decision? Here is her response:

Most of the media has come to use the phrase health care, when they are really talking about health insurance. Health Care – the services provided to maintain your good health or treat illness and injury. Health Insurance – provides protection against financial loss in the event of serious/expensive illness or injury. When evaluating which health insurance benefits you should purchase, it is important to evaluate the combination of an individual’s potential out-of-pocket cost and the insurance premium. The objective should be to find the most cost effective way to pay for your health care needs.
Example: Real Company – 6 employees with an average age of 41

Current Plan:

Office Visits: $20 Primary care, $25 Specialst
Prescriptions: $10 generic, $30 brand-name, $50 specialty brand
Deductible: $1000 per person, $2000 per family
Maximum Patient Expense: $2500 per person, $5,000 per family

Premium:
Employee, $453
Couple, $1043
Parent/Child, $816
Family, $1360

Proposed Alternative:

Office Visits: $20 primary care, $25 specialist
prescriptions: $10 generic, $30 brand name, $50 specialty brand
deductible: $2500 per person, $5,000 per family
maximum patient expense: $3500 per person, $7,000 per family

Premium:
employee, $341
couple, $785
parent/child, $614
family, $1023

It is evident that the premium savings exceeds the potential additional expense of $1,000 per person/$2,000 per family.

This employer does not want the potential increase in expense to be borne by the employee, and has implemented a health reimbursement arrangement so that in the unlikely event someone has a serious medical situation the $1,000 will be available to make up the difference. While the numbers will change based on the employee population, the concept remains valid for every situation. Health Benefits prides itself on providing every client with an in depth comprehensive review to design the most cost effective employee benefit program possible




Maureen Hedges, Certified Employee Benefit Specialist is President of Health Benefits Insurance and Consulting in Bangor, ME She can be contacted at (207) 992-4412 or mhcebs@midmaine.com

Photo Credit: Waldo Jaquith, Lisa Brewer