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Small businesses can get relief on employee health coverageBy Jay Fulkerson
According to the Kaiser Family Foundation, just 59 percent of small firms offered employee health benefits in 2005. And among the smallest employers -- fewer than 10 workers -- the percentage plummets to 47 percent. Alarmingly, these percentages are dropping annually by nearly 5 percent. One of the most successful solutions for employers searching for affordable employee coverage is the consumer-driven health (CDH) movement. By implementing CDH and changing plan designs, small businesses can achieve tax advantages and an immediate reduction in premiums. Yes, raising deductibles increases the risk for employees, but it also reduces monthly premiums. Employers reduce premiums to continue offering benefits and to involve employees in their health-care decisions, and they can contribute direct funds to help employees pay for their health care. The most popular CDH approach is the Health Savings Account (HSA), which allows employees and their employers to put away money for future health-care expenses on a tax-free basis. The money in these accounts belongs to the employee and employees can take it with them when they change jobs or retire. Another consumer-driven health plan model, the Health Reimbursement Account (HRA), is less known among small businesses but equally effective. Funded solely by the employer, this account remains with the employer when a covered employee leaves. Since 2002, mid-sized and large employers have been using HRAs to realize significant cost savings and advance consumer engagement, and employers across Wisconsin, regardless of size, can realize similar benefits. One approach would be for employers to pair a non-taxable HRA with an insurer's medical plan. Employers determine the funding level of the HRA, which employees apply toward health-care purchases. Early indications show employers with HRAs consider making higher contributions -- typically $1,000 or more -- to employee accounts. In some ways, those figures are surprising because conventional wisdom would suggest small businesses would contribute less than that because they have fewer dollars available. It makes complete sense because as employers spend less on premiums they can afford to pump part of that savings into their workers' accounts. This ensures workers have access to funding for medical expenses. Couple that with preventive care coverage and consumer-based tools designed to give people more information about their health-care options, and it is likely to encourage wise health-care and lifestyle choices. Larger employers have seen such results. A UnitedHealth Group study of 20,000 HRA enrollees found they were more likely than people with traditional health plans to use preventive services and are less likely to use emergency services, specialist visits, outpatient surgery, radiology and lab services. This illustrates more selective, responsible use of health services. There's no reason to doubt those trends will hold true among smaller businesses as well. By offering an HRA, a small business would have lower premiums, tax advantages, easy HRA administration with auto rollover from the health plan to the HRA fund, and unique employer design options that fit the specific need of individual small business employers. At the same time, they can help make health-care more affordable and more accessible for their employees. While there is still no silver bullet to end the health-care affordability crisis, all Wisconsin residents deserve a basic level of coverage. Until the system undergoes fundamental changes, HRAs have the potential to help make that vision a reality for small businesses and their employees. madison.com ©2009 Capital Newspapers. All rights reserved. |
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