Quick Insurance Tips

Most people want their employer to offer health insurance, however if you are a business owner the benefits of employee retention and recruitment have to be weighed against the rising costs of group health insurance coverage. 

Even if you shop around and compare health insurance rates for a small business, you may find that none of the rates are affordable.  You may be forced to eliminate or reduce coverage because insurance carriers cannot keep prices down in this environment.  Doctors charge more; hospitals charge more; pharmacies charge more.  These costs have to be passed on to the insurance company. The insurance company in turn has to pass these costs along to businesses that purchase group insurance.

Insurance costs are rising faster than general inflation, wages and business income.  There is no indication that this will change in the near future.  This leads to a great deal of unpredictability and makes planning a long term budget for your company difficult.

Offering health insurance to employees in an environment where rates rise faster than your company’s income forces you to make difficult choices.  You can reduce the company’s profits and maintain your group health insurance.  You can eliminate health coverage all together and have angry employees and potentially lose key employees.  You can reduce coverage, which may have the same effect.

If you fail to offer health insurance, you may have a difficult time recruiting new employees.  However, by not offering the coverage, you may be able to offer a more competitive wage.  This may offset the competitive disadvantage of being a firm without health care benefits.

This is a win-win strategy for only a small percentage of businesses.  Employees can often purchase individual or family health insurance at a lower cost than an employer can purchase it.  Group health insurance plans in Los Angeles and in many major cities can cost much more than similar health insurance plans offered to healthy individuals.

Unfortunately this strategy is only works for healthy employees who have healthy families to insure.  Many people have preexisting medical conditions that will prevent them from finding affordable health insurance.

For those that can medically qualify for a private health insurance plan a pay boost equal to the amount your business spends on health insurance is likely to be a boon.  However, other employees may be left out in the cold and harbor resentment against the company.

Your business and your employees may benefit from eliminating group health insurance benefits and using some of the savings to increase employee wages.  This can be great thing if your employees are able to purchase medical coverage through a private insurer at a lower price. 

Unfortunately, this will only happen if all of your employees and their families are healthy enough to qualify for an underwritten private medical insurance plan.  One employee with medical issues can keep this plan from working.  This is true of new employees as well.  Therefore, having a stable workforce is also important to making this work.

In tough economic times, business owners have to make difficult decisions.  Today many business owners are choosing not to offer group health insurance to keep their costs down.  Many business are being forced to chose between losing employees or losing money by keeping their health plan.