The Changing Face of Insurance

The Changing face of Insurance

Our first Question from Vistage Chair, Jaynie Smith:

What are companies doing today about health insurance as rates climb?  Are you covering employee only?  Family?  How much are you passing along to the employee?

There appears to be no question that at the beginning of the New Year, health insurance rates will increase. In 2016 premiums increased an average of 7 percent and the predictions for 2017 are that premiums could increase as much as 50 percent. Like many decisions made by companies, both large and small, the pros and cons of every decision should be researched and the repercussions should be considered before a final procedure is implemented.

Here are many advantages of offering high level health benefits to employees even though the majority of the financial burden usually falls on the employer. The following are a few key items to consider.  

~ To retain the most qualified and effective employees companies must stay at least competitive if not superior to other employers who offer similar benefit packages.

~ The company may be allowed significant tax deductions through a tax credit making the out of pocket costs far less for both the employee and corporation. This should be researched and shared with those affected.

~ Group purchasing power may significantly reduce costs overall for premiums.

~ A healthy workforce is more productive and has less absenteeism due to illness. Insurance coverage offers preventative care that without insurance many people avoid.

The downside to offering high level health benefits are more than just the effect on the bottom line.

~ Particularly with smaller companies with less resources other programs or benefits will need to be cut in order to afford more insurance expenses.

~ The employer and employee relationship may suffer as a result of passing on some costs to the employees who may be seen as unsympathetic to the plight of the worker while the reality is the employer and employee have to be realistic about future increases.   

~ Ongoing insurance changes have become an ongoing expense and burden to employers as the administrative costs are high in order to stay current and provide the best coverage for the employees.

~ There is a risk of liability as the employer becomes in charge of selecting the insurance company type and coverages offered. Most employers hire consultants and employ staff to seek out the best advice however this information can be challenged by disgruntled employees and others who feel they may have not had the best coverage offered in a changing world.

The Affordable Care Act is an option that can be taken. The employee can decline the company health coverage if the ACA is better. The choice is up to the employee. If a company does not have specific qualified healthcare, the employees can purchase the ACA. The company must provide coverage if they have over 50 employees. If the company has healthcare they must offer it to the employees who can decline it if the ACA is less expensive. If you make under a certain income, the ACA coverage is subsidized by the government. If not, you pay whatever the cost is. If an individual does not have coverage they can be fined.

Uncertainty is uncomfortable for all involved and financial planning is near to impossible without accurate predictions. Companies should be looking at ways to offer different levels of family and individual coverages and to provide information to employees from outside experts on what best to choose to save money and be cost effective for all involved. It’s incumbent on all of us to take personal responsibility to know what plans are available for ourselves personally and for our employees and what the right fit is. Communication as always is key with your employees, understanding the costs of insurance will need to be shared in some way so that options are on the table.

 The big question we are all facing is, “How can we afford all these new expenses.” One benefit of the ACA has been that many people who were not able to have any health insurance prior now have coverage however; the cost may soon become prohibitive for many more. If new plans come to offer the benefits of the ACA along with lower premiums of course there may be good news on the horizon.

We have no verified data on costs at this point however it appears that now is the time to actively seek input from industry experts to help balance the costs to all parties involved and to balance the financial burdens. Utilizing your employees as a source of input, is one way to get a positive conversation going about their needs and the company’s best interests. 

Kelly D. Scott
Chairman/CEO
Vistage Florida
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