If you are a business owner struggling to provide health insurance coverage for your employees, you are probably well aware of the pricey premiums. In the fourth consecutive year of double-digit health premium increases, many business owners are looking for ways to manage the cost of providing health insurance for their employees.
Common wisdom suggests that you can reduce those premiums by increasing plan deductibles, raising co-payments, or adjusting the plan's co-insurance percentages, that is the employer/employee ratio, so that your company pays a smaller portion of the cost of medical treatment. While these cost-cutting methods may work to lower the employer's share of the premiums, they can frustrate employees who are left carrying a larger portion of the proverbial bag of healthcare costs.
So how can you cut the high costs your company is paying to provide medical benefits? Here is one option you may want to consider.
Increasing your health plan's deductible can provide dramatic cost savings for your company. It is also a favored savings option because it does not change the plan's co-pay, co-insurance or prescription coverage, and since nearly 2/3 of all insurance claims are for doctors' visits and prescriptions, many plan participants are seldom impacted by the increased deductible.
However, increasing a plan's deductible means the plan participant has to pay a greater amount before any insurance coverage kicks in to cover the cost of inpatient or outpatient treatment. That added expense can become a tremendous burden to someone hospitalized or temporarily unable to work.
Now a company can offer a Deductible Reimbursement Plan, also called a Gap Plan, to supplement its existing health plan. While the company realizes significant savings by increasing its plan's deductible, the more cost-efficient Gap Plan reimburses participants for all or part of the increase in the deductible. So while participants initially pay a higher deductible when they undergo medical treatments, the Gap Plan reimburses them in an amount that allows them to effectively continue paying the lower deductible.
"Gap Plans are a growing trend, especially for smaller businesses that cannot afford to continue paying for low-deductible health coverage," said John Allen, president and COO, G&A Partners, a Houston-based Professional Employer Organization (PEO) that provides Human Resource and Administrative services for clients throughout Texas.
Allen shared the savings one law firm realized by instituting a Gap Plan to supplement their health plan. After seeing a more than 40 percent increase in insurance premiums that raised their monthly payment from $14,500 to $20,517, the law firm began looking for alternative solutions. By increasing their employees' deductible to $1,500, the partners were able to reduce the firm's monthly premium to $16,800 and experience an annual savings of $44,556, but the firm's employees were unhappy with the added financial burden. The partners then decided to implement a Gap Plan for the firm's employees. The firm paid an additional $788 each month for the Gap Plan, raising their monthly premium to only $17,588. On an annual basis, the firm still enjoyed a savings of $35,100, and the employees were no longer worried about their financial liability.
To learn how a Gap Plan could be help your business experience similar savings on its insurance premiums, contact G&A Partners at 800-253-8562, or via email at jwallen@gnapartners.com.
