Affordable, flexible health Featured

7:00pm EDT February 24, 2008

The number of companies that offer group health insurance has dropped 15 percent in the last five years. In fact, in 2005 there were 46.6 million uninsured Americans and, sadly enough, this total continues to rise.

Employers struggle to find ways to retain and attract employees who want health care coverage. One viable solution to this problem is limited benefit medical plans (LBMPs), which are gaining popularity. LBMPs offer companies a way to respond to the vital need for health coverage and, in turn, have a positive impact on issues such as employee retention, productivity and turnover. Employers have many difficult challenges when it comes to running their business, including the cost of providing benefits.

Smart Business spoke with Craig Pritts, a sales executive with ChamberChoice, about LBMPs and how they can help your company.

What exactly are LBMPs?

LBMPs have evolved since they were first introduced in the 1980s. The plans pay a fixed dollar amount for covered medical services to help meet the basic health insurance needs of employees and their families. Today’s LBMPs help defray the costs for an employee and family members in several areas, such as outpatient sickness, emergency accident, hospital confinement, surgical benefits and prescription drugs. Many plans include wellness benefits, fitness discounts, vision services and online health information.

LBMPs were initially geared toward the working uninsured and part-time or seasonal employees. Early on, they were most popular with temporary agencies, fast food chains and smaller companies. According to a survey conducted by Kaiser Family Foundations and the Health Research and Educational Trust in 2005, approximately 20 percent of U.S. employers offered LBMPs at that time. This trend has caught on and gained popularity across the country. Today, many employers — large and small across all industries — offer these plans as a strategy to reduce costs and retain employees.

What advantages do they offer?

The advantages of LBMPs are numerous. The affordable monthly premiums appeal to employers and employees alike. Employers pay an annual premium of almost $11,000, on average, for traditional family coverage, while the premiums for LBMPs are less than $6,000 a year for a family plan. LBMPs enable businesses to save thousands of dollars a year without eliminating coverage altogether.

Unlike traditional employer-sponsored plans, LBMPs do not require a significant contribution from the employer. They also can be offered on a voluntary basis, which means the employees pay the full premium amount. Most employers do, however, contribute some portion of the monthly premium.

Two additional advantages associated with most of the LBMPs available today are low or no minimum participation requirements, and no medical underwriting. The affordability and flexibility of these policies and the fact that they do offer a valuable safety net leads us to believe LBMPs will continue to grow in popularity.

What variables should be looked at when considering LBMPs?

Benefit managers and business owners need to look carefully at the provisions of these benefit plans because they have been created to defray costs, not to pay for all health care services entirely. It is very important to note that LBMPs are not meant to replace traditional group benefits. They are designed to provide a means to offer coverage to the working uninsured.

Are LBMPs being heavily implemented?

According to the Business Journal, the number of people enrolled in these types of plans is expected to grow as much as 20 percent in the next few years from the more than 1 million enrolled in 2006. The 2006 Census Bureau Report stated that 1.3 million Americans lost their health care coverage in 2005. With statistics like this, LBMPs may be the answer for an increasingly growing number of employers and employees.

CRAIG PRITTS is a sales executive with ChamberChoice. Reach him at (412) 456-7253 or craig.pritts@jrgadvisors.net.