Getting Sick Over Your Health Plan?

Posted by Jim Van on May 12, 2011 under Uncategorized | 3 Comments to Read

Spring has finally sprung, and as surely as the green is returning to the trees, our annual health care prospectus came in the mail the other day. I truly think that the real purpose of this annual ritual is merely to provide our health insurance company the opportunity to raise rates (5% this year) and to reduce benefits (20& increase in copays this year). Add to the confusion: the plan that we’ve offered employees for the past five years has a new name, and, yes, shall we say different benefits. Our average cost to cover an individual employee (we cover 80%) is now $360/month. Our average cost to cover a family is now $900/month (we split the total premium). Add to that a $45 monthly dental and vision benefit, and it becomes a pretty big burden for a small business to bear. 14.5% of payroll costs, just to cover health insurance, and that doesn’t even take into account the FICA/Medicare/Unemployment Insurance/Workman’s Comp contributions, 401k contributions, vacation, sick/personal dayws, holiday pay that all add up to a 36% premium on basic salary costs. Never mind continuing education and a dozen other incidental costs that most employees never take into consideration.

Still, offering a solid health benefit package is the best retention insurance a company can provide, because so few companies do. Respndants to a recent survey conducted by Robert Half International, an employment firm, said that health insurance was the main reason they accepted the offer at their current employer by a 83% margin. Given that it costs, on average, $4,000 to acquire a new employee, even in today’s climate, perhaps there’s a somewhat reasonable ROI on our investment in our employees’ coverage.