Looking for healthcare coverage for your employees? You’re not alone.
With the implementation of the Affordable Care Act, employers with 50 or more full-time employees are now required to provide healthcare coverage for their employees.
The mandate has caused confusion for many who have never had to research and purchase health plans before.
Keep in mind that you are not alone. Many people have been in your shoes and they have gotten through it. From reading advice such as this article to now having healthcare services for their employees, the process can be less painful if you go into it knowing you will come out of it unscathed.
Prior to jumping in and just purchasing coverage, here are a few things to bear in mind.
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Understanding the Cost
Prior to doing any research, you need to understand what drives the cost of healthcare. According to Consumer Reports, the cost of healthcare in the United States is twice as much as it is in the rest of the developed world. But what makes up the cost of healthcare? You will come across articles on the internet that attribute class-action lawsuits (medical malpractice) to the rising cost of healthcare. While it may factor into the cost, the actual impact is very small, according to lead trial attorney Lawrence J. Buckfire, founder of DrugLawsuitSource.com.
“The actual cost of defensive medicine is less than three percent. Lawsuit payouts from defective drugs and other legal costs do add to the overall pie, but this only makes up a small portion of overall healthcare costs,” Buckfire said. “You also need to factor into what we pay for preventative care, long-term care and hospitalizations.”
PBS agrees and adds that there is no single “villain” that drives up healthcare costs. In 2012 they cited seven factors that contribute to rising costs. They include - the fact that we are growing older and not taking care of ourselves; regulations that cause manufacturers to spend millions of dollars to bring drugs to market; and better technology is allowing healthcare facilities to demand higher prices for better care.
Insurance companies must take many factors into consideration when setting the price of coverage. You will see one provider charging more, but this does not necessarily mean they offer better healthcare coverage. Insurance companies need to make money in order to survive so each company will offer different coverage at different prices. This is why it is important to compare all available options before making a purchase.
Comparing Health Plans
When comparing health plans, you need to take both cost and coverage into consideration. For those just starting the process, I like to use the example of purchasing a car. Just because one car is cheaper does not mean that it will fit your needs. You also don’t want to choose the most expensive car when there are plenty of similar alternatives at a lower price.
“When comparing health plans, make sure you compare the individual coverages within,” says Stephen Anderson, founder, and CEO of Medicare Health Plans. “In addition to overall premium cost, you need to compare deductibles as well.” With so many variants in healthcare coverage, how do you decide?
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HealthCare.gov helps out when it comes to sorting plans by premiums. They search for and organize plans as being Bronze, Silver, Gold, or Platinum. Each level is based on the percentage of premiums paid by the company versus the employee. The closer to platinum you get, the less the employee must contribute.
If you still need help and are frustrated with all the information available online, you can seek help in person. The Center for Consumer Information & Insurance Oversight has centers throughout the United States to help answer questions. A division of Health and Human Services, you can also find additional help through them online.
You need to get input from your employees about the health plans you are considering, especially if they are contributing towards the cost. You may find that they like one plan more than another, which could actually save you money because the plan they choose may be more beneficial to them, and be the cheaper plan for you at the same time.
"In today's world, employee compensation is inexorably tied to health benefits,” says John Nosta, critical thinker and President of NostaLab. “Employers are well advised to looks beyond simple acquisition costs and evaluate how health plans can uniquely fit the needs of their employees. In the final analysis, healthcare itself can be an employment deal-maker or deal-breaker."
Nosta is correct. A CareerBuilder survey reported by Forbes in 2014 shows that 58 percent of workers cite better benefits as a way to boost employee retention. As such, you can factor the cost of hiring new workers into your cost of healthcare. If you pay a little more for a plan that meets your employees’ needs, you may still save money by not having to train new employees.
Final Piece of Advice
The one piece of advice that you should always remember is there are plenty of tools out there to help you. In addition to the HealthCare.gov website for small businesses, you can also check out the Business.com SME Guide to Health Insurance.
Have you had to look for healthcare coverage for the first time in your business? Please do share your thoughts in the comments below.