Broad vision Featured

9:51am EDT April 22, 2005
If you're a small business owner, it's a good bet you have direct involvement in the purchase of health coverage for your employees.

You're also probably spending more time than ever trying to figure out how to offer competitive health benefits without doing significant damage to your bottom line. And, if you're like some of your competitors or peers, you're faced with an even tougher decision -- can you continue to offer health benefits at all next year?

It's no surprise that small business owners surveyed by the National Federation for Independent Business put the cost of health insurance at the top of their list of most critical problems. The Kaiser Family Foundation reports the number of small employers (companies with three to 199 employees) offering health coverage declined from 68 percent to 63 percent over the last three years. That means an additional 5 million workers are without health insurance.

Your company doesn't have to be part of that growing number. By applying some simple strategies, you can not only continue offering health benefits to your employees, you can do so in a way that's less disruptive to the financial health of your company.

When it comes to health coverage, one size does not fit all. Employees have different needs. Some want comprehensive coverage and are willing to pay for it. Others would rather pay less each month in exchange for a higher deductible before traditional PPO coverage kicks in. If you're funding full coverage for these employees, it may be more coverage than they need or want.

Some insurers will let small employers offer two, three or more health plans side-by-side. That way, employees choose the level of coverage that's right for them. You don't pay for more than your workers need, and more of your employees may elect health coverage -- all of which can help keep health benefits affordable.

Consumer engagement
Consumers are emerging as the most promising players to contain health care costs. For most consumers, economic realities remain hidden.

Many believe the total cost of a visit to the doctor's office is their $20 co-pay. But when people are spending a meaningful share of their own money and are given good information to do it wisely, they will be much better at controlling spending for themselves and for your company.

Consider plans that give consumers responsibility, such as those with a front-end spending account. As consumers spend the account on health care services, they have good reason to investigate the true costs of care and an incentive to make cost-conscious decisions.

Tax advantages
Employers can use tax-advantaged spending accounts to help manage the cost of health benefits. Health Savings Accounts (HSAs) allow employees to save money for medical expenses and invest the account on a tax-deferred basis, with the employer, employee or both contributing to the account.

HSAs are typically paired with a high-deductible health plan, offering premium savings, and HSAs are portable, so employees can take the account with them from job to job.

In a Health Reimbursement Arrangement (HRA), the employer contributes to a health care account on a pre-tax basis, and employees use the money to pay for qualified medical expenses. Employers can realize premium savings by combining the HRA with a high-deductible health plan, and employers need not fund the entire account at once, which helps cash flow. One challenge can be the administrative work in setting up the account, so look for an insurer that offers the HRA and health plan in one easy-to-administer package.

Lastly, employees can save pre-tax money for health expenses in a Flexible Spending Account (FSA). The downside of an FSA is that the account does not roll over from year-to-year, meaning employees must"use it or lose it.

Value-added extras
Does your health plan offer clinical programs to help employees with chronic conditions? How about information and tools, such as online calculators to forecast out-of-pocket costs for health care services?

Does your health plan provide educational materials to help you explain to your employees the realities of today's health care environment? Forward-thinking health plans build such features into a comprehensive package.

Something else your employees will appreciate is a debit card to access spending account dollars. Swipe the card at the pharmacy or doctor's office to pay co-payments or other charges for health care services. No need to fill out lengthy forms to request reimbursement.

Having such a card can encourage more employees to take advantage of spending accounts such as HSAs, HRAs or FSAs. Some insurers combine the debit card with an insurance ID card.

No one should minimize the challenge when it comes to health benefits, but with some careful planning and sound strategies, manageable health benefits might be closer than you think.

Alan Guzzino is the president of Humana's Atlanta, North Carolina and South Carolina market health plan operations and is responsible for the management, strategic planning and growth of those markets. Guzzino, an eight-year veteran of Humana, currently serves on the board of the Georgia Association of Health Plans. Reach him at