No two ways about it. Either you have medical insurance and it costs too much or you don't have medical insurance because it costs too much. Its become a double-edged sword.
For those of us with medical coverage -- be we independent counselors or heads of small, medium or large firms -- medical insurance costs rank right up there with payroll and facilities costs as one of the top operating expenses. Add a handful of employees and their dependents into the mix and things can get downright scary.
For those without medical coverage, which is a growing percentage among entrepreneurs and managers of small firms, you find yourself ever-so-slightly tip-toeing through life hoping to avoid accidents, injuries and any unplanned hospital stay. One wrong move and you've got yourself a $100,000 expense.
Either way, you feel caught between a rock and a hard place when it comes to something as basic as health coverage. With each election cycle come promises to overhaul a broken system, with both parties floating ideas that, given some tweaking, could work. Ultimately, though, these plans never seem to come to fruition.
Short of encasing yourself in bulletproof glass or winning the lottery, isn't there a better way?
Fortunately, two ideas seem to be catching on. One is an emerging individual insurance market that insurers are finally beginning to accept exists. The other is a professional employers organization, which in its strictest sense pools you and others like you into a large enough group to buy insurance at bulk rates affordable enough for the individual group members.
In today's Wall Street Journal, an opinion piece by two Bain & Company consultants outlines how and why an individual insurance market makes sense (the article summary is free; the whole article is available through online subscription). I, for one, believe that lack of recognition of this market has been one of the single-biggest hurdles to entrepreneurship in the country. Personally, I would have started my own firm long before I did had I had reasonable options for healthcare coverage for my family. You probably know others who've opined similarly. At last, insurers are recognizing the existence of this market and are tailoring plans to meet individual healthcare needs. You probably have plan examples in your area through Blue Cross Blue Shield and WellPoint, which has an individual plan for as little as $77 a month. The article compares the evolution of this market to the sea-change necessary to move from group-based pension plans to individual-based 401(k) plans and singles out Fidelity in particular as experts in slicing and dicing demographics to create profitable niches. I am looking forward to what they and others will create in this space and believe competition will bring numerous choices to consumers now that the glacier seems finally to be moving.
The other idea that is growing in popularity is the professional employer organization or PEO. PEOs are run by for-profit companies like Gevity and Administaff, among others. The idea is to create an organization where other organizations can offload (dare I say outsource?) human resources activities. They bundle recruiting, hiring and retention services into packages that also include payroll and healthcare plans. Most small firms, like mine, sign up solely for access to the healthcare plans, using the other services only sparingly, if at all. In a nutshell, the PEO is a co-employer of your team along with your company; however, you retain 100% control over them and your operations. The co-employment relationship is necessary for the PEO to assume legal risks of typical HR activities and to qualify your employees to gain access to the medical plans. As the client, you have a number of plans to choose from and can tailor a solution specifically for your demographic, market or personal tastes. We employ no more than 10 people and I would dare say that our benefits compare favorably with some of the largest PR firms in the largest U.S. markets. Our employees enjoy full medical coverage at a 90/10 split, full dental coverage, full vision coverage, short- and long-term disability, 401(k), business travel and accident insurance, dependent coverage options, voluntary coverage options, adoption assistance and continuing education assistance. It helps that we are committed to providing these things as a matter of course. But it also helps that there's a place for us to go to be able to get them at a reasonable price without having to cobble together a handful of different solutions that end up being an administrative nightmare. I'd be glad to explain more about our PEO relationship and how it works if you want more information. Contact me at jason dot anthoine at thecohesiongroup dot com
I bring all this up because the first of the year is a good time to look at your operation with a fresh set of eyes. Spring is traditionally a strong recruiting season and having these kinds of benefits in place can mean the difference between landing those plum new hires or getting left with the pits.
Comments