As businesses try to save money, pricey health benefits are a common target.
Owners of Rapport Benefits Group, a health brokerage company located in Tacoma’s William M. Factory Small Business Incubator, say options such as lowering premiums and raising deductibles can help companies reduce costs without employees losing important benefits.
And they’re finding the economic climate to be just right for employers to rethink the health plans they’ve always offered.
“When everybody has a bunch of money, who cares about insurance?” asked Chris Free, one of three owners of Rapport. “Now that companies are worried about where their money is going, it’s easy to get business owners to talk about what insurance plan they’re on.”
Free says it takes a lot of talking – and handholding – for both parties to understand the difference between what a plan covers and how it’s funded, the latter of which can become a source for savings.
“The amount of money employers can save is so mind-boggling, they ask, ‘What’s the trick?’” said Petra Perkins, another owner of Rapport.
The trick, she says, is helping companies pocket the extra that otherwise would go to insurance providers.
A SAVINGS SUCCESS
It’s worked out well for J.L. Darling Corp. in Fife, controller Susan Heye said.
She said Rapport has not only saved her company money over the past three years but also helped its 57 employees understand the new options.
“We’ve always been very generous with our benefits package, so we wanted to stay within that norm, but at the same time make prudent choices that made sense for our company,” Heye said.
The company still offers a more traditional health care package, but one-fourth of employees opted to switch to Health Savings Accounts offered through Rapport since August. The plans bring higher deductibles – or the amount an individual must pay before insurance picks up the bill – but channels the company’s savings from lower premiums into an account employees can use for medical expenses.
J.L. Darling employees can use debit cards on the accounts to spend their $1,200 – the amount not covered with the higher deductibles – to pay for anything from prescription drugs to Lasik eye surgery.
Money they don’t spend accrues interest in the account and could be used for future health emergencies, Heye said.
Even if it is the best option, mere talk of raising deductibles is, at first, a scary topic for employees accustomed to “more comprehensive” packages, Perkins said.
“When the deductible goes up, you have to deal with that fear of the unknown,” Perkins said. “You have to teach (employees) to look at health care and money in an entirely different way, or they will invariably say, ‘Our plan sucks.’”
Heye said J.L. Darling employees are happy – and maybe healthier – with the new options. And the company likes its perks, which include greater tax benefits from offering the HSA plans.
“You always want your employees to feel like their benefits package adds value to their compensation,” she said.
AN AFFORDABLE RISK
Similar options in the health market include Health Reimbursement Accounts, which place the savings into the company’s pocket while guaranteeing employees still won’t pay for the difference in deductibles. Free said HRAs have been available in the health market for years, but Rapport is offering them as a solution to rising health care costs.
“You’re paying for transferred risk,” Free said he tells companies about the different options. “Don’t pay to transfer $1,000 worth of risk you and your employees can afford to take.”
Cary Hall, president of Benefits by Design and host of the Health Insurance Advocate Radio Show, is another broker who suggests these plans to save his clients money.
He recently helped a company of five employees save $24,000 a year on health benefits by switching to a savings plan.
“These folks can be saving people a lot of money without cutting out their benefits,” he said, noting that many new plans in the marketplace address 80 percent to 85 percent of individuals’ needs for much less.
Free says such advice is not something companies get from most insurance brokers, who are paid with commissions from insurance carriers based on the cost of plans. He said selling the comparably cheaper plans means advisors, such as those at Rapport, get paid less.
But it hasn’t hurt business so far at the small start-up.
The company’s economic approach has led to growth since its 2006 birth at the Incubator, with hopes of soon outgrowing its five-year lease.
“I would definitely say the economy has helped us, though I feel bad saying that,” Free said.
But ask these insurance brokers if they’ve found success by helping cash-strapped companies slash benefits – and their answer is a vehement “No.”
“It’s not a cut in benefits. It’s a different way of delivering,” Free said. “If you’re an employer that wants to cut benefits and leave employees out in the cold, you’re not a good client for us.”
Whitney Coleman: 253-597-8546
whitney.coleman@thenewstribune.com">whitney.coleman@thenewstribune.com
Companies have options
Here are some of the most popular plans brokers, such as those at Rapport Benefits Group, suggest to save companies money on the health care plans they offer, while maintaining employees’ benefits.
Health Savings Account: Designed to help individuals save for future qualified medical and retiree health expenses on a tax-free basis (created by the Medicare bill signed by President George W. Bush on Dec. 8, 2003).
Health Reimbursement Arrangements: Employer-funded accounts that employees can draw upon to pay qualified medical expenses, a fast-growing marketplace solution to rising health care costs.
Flexible Spending Accounts: Employer-established benefit plans that reimburse employees for specified medical expenses as incurred.
High Deductible Health Plan: Generally paired with a Health Savings Account, these plans have lower premiums and higher deductibles than a traditional health plan, but can save costs on unneeded services if used correctly.
