Five Nuggets of Healthy Advice

Experts who specialize in health insurance and health care offer this advice to employers for finding the health plan that provides the best bang for their buck:

Make sure the choices presented to you by insurers are comparable. Compare prices and benefits, examine what's different or what's new.

Find a trustworthy adviser who has experience in your industry or the type of benefits you want to provide to employees.

Think outside the box. Approach health benefits as a long-term cost of doing business. Consider in-house wellness programs that can improve employee health and reduce their use of health care services and benefits.

"Companies need to study their own data so they know what services and benefits their employees use and how much that usage costs," suggests Lynn Olman, executive director of the Greater Cincinnati Health Council. "Then they can concentrate on health improvements, projects, and programs targeted to the services and benefits their employees need most. The goal is to create a healthier work force so they don't access as many services."

Ask if health coverage can be offered in lower-cost settings, adds Angi Johnson, executive vice president of clinical services for the nonprofit Visiting Nurse Association, which provides in-home supportive care and skilled nursing care. Frequently, employers don't know that lower-cost options exist and don't know to ask if those services can be included in traditional benefits packages, she says.

When Eiler Belperio assumed responsibility for managing the health-plan benefits for 400 full-time employees of Episcopal Retirement Homes several years ago, she followed a process that's typical of many businesses, large and small.

Using August as the starting date for the employees' open-enrollment period to choose the next year's plan, Belperio began meeting in early summer with her organization's insurance brokers to examine the coming year's options and choices, send out bids, and wait for premium quotes from health insurers to come back.

After an arduous comparison of benefits and costs, typically higher than the previous year, she would choose one that fit her company best. Two years ago, with the agency's executive team involved, the organization tried something different. Episcopal hired a group-health consultant, who met with Episcopal's executive team to develop a long-term health benefits strategy and plan. The consultant met with employees to see what options, benefits, and choices they wanted.

"That's something we'd never done before," Belperio says. "We'd just figured, 'Well, employees want health insurance, let's give them health insurance.' We had always had two plans for employees to choose from, but they were always very similar. And we found that that wasn't enough choice for our employees. Because our employees' ages range so much "” 18 to 65, basically "” we had to find two products that would fit a full range of options, and that took some work."

Indeed, it does take work for today's employers, no matter what size the company or how many employees, to find affordable and employee-valued health care plans. That leaves employers with plenty of options "” basic insurance plans, low-cost plans with higher out-of-pocket expenses for employees, or higher-cost plans with plenty of benefits, options for vision and dental coverage "” and frequently very little guidance on which to choose or how much to pay.

And despite rising costs, many companies continue to offer benefits-rich plans to employees, says Michael McCarthy, partner with McCarthy-Stevenot Agency in Blue Ash, which specializes in group health plans for small employers.

"What's really surprising is that benefits now, dollar for dollar, are better than they were 20 years ago," says McCarthy, who often urges his employer clients to scale back their benefits plans or ask employees to pay more to keep total health costs affordable. "Twenty years ago, you didn't have a prescription drug card, you didn't have an office co-payment, you didn't have in- and out-of-network coverage, and today's networks get bigger all the time. Employers are keeping really rich plans in place for their employees."

They're also paying more for those benefits. According to the nonprofit Employment Policy Foundation in Washington, D.C., employer spending on health care increased 12.4 percent from 2002 to 2003.

Many companies respond to rising health cost increases by asking employees to chip in more for premiums or by decreasing benefits, according to a 2004 study of small- to mid-sized firms by Marsh Inc. On average, companies can spend $5,000 to $7,000 or more per employee toward health insurance, according to Marsh.

For Episcopal Retirement Homes, the new approach to health care costs made the difference, not only in what the organization offered to employees but also in what it paid for health benefits.

Episcopal helped insurers understand its needs for varied plans. It explained the organization's workplace culture of preventive health and wellness programs for employees "” an approach proven to generate fewer claims.

As a result, Episcopal's employees were offered two widely different plans: a low-cost plan with more out-of-pocket expenses, favored by younger employees with fewer health problems, and a benefits-rich plan with higher premiums and lower out-of-pocket expenses, favored by older workers with more health challenges. Since the new approach, Belperio says, Episcopal's annual health care increases have ranged from 3 percent to 5 percent.

"By changing the plans we had, we met more of the needs of more of our staff, and we did that by strategizing," Belperio says. "We looked at what the employer portion would be, what the employee portion would be, and we knew what we could afford year to year if we got hit by a premium increase ... but employees had choice."

Rich Niemeyer of the Scheller Bradford Group, and formerly associate director of employee benefits for Procter & Gamble, encourages companies to consider health costs as a long-term cost of doing business, not simply a year-to-year-choice to be made.

"Typically, companies have options put in front of them once a year, they struggle, they select, they make a decision ... and then they don't think about it again for another 10 months," he says. "Then it rears its head again ... and they go through the same process again."

Instead, he urges companies to undergo a six-month planning cycle to examine the potential impact of health care costs for the next five years. Then, identify what the company can afford, assess which benefits and services employees use, examine what its competitor companies are doing, identify what employees want and need, and then come up with a long-term plan that's integrated into the company's business plan.

The federal government is helping, too. The 2003 law that created the new Medicare prescription drug plan also included a provision for Health Savings Accounts, or HSAs. HSAs are pretax accounts into which employees and employers set aside money to pay premiums and claims. Eligible employees must be covered by a health plan with high deductibles and out-of-pocket expenses (at least $1,000 and up to $4,000 a year) until the HSA is funded enough to pay most health-related costs. Michael McCarthy sees HSAs as one option that will be inviting to companies with higher-paid employees who can afford higher out-of-pocket expenses.