Talking to employees can ease pain of benefit costs

The monthly premium for our company's health insurance coverage goes up 16 percent on January 1. Ouch. Again.

But Luis Cruz says our increase "is not too bad. Twenty-five percent is high. Sixteen percent isn't outrageous."

Cruz is president and CEO of Schaumburg-based Cruz Financial Group, Inc. He's not our insurance agent, so he has nothing to protect by telling us 16 percent isn't so bad.

While there are options to accepting yet another health benefit cost increase - switching carriers or opting for individual policies are two - Cruz thinks business owners can benefit by discussing benefit plans and costs with employees. He also thinks we may be too concerned about matching the benefits larger companies offer.

For example, Cruz says, "Mid-size companies lots of times would cover 100 percent of health benefit costs. Smaller companies felt they had to match those benefits" to attract and keep good workers.

More recently, he continues, "Medium size companies have realized they can't afford that coverage, so they're having employees share the cost. The employer says, 'I paid 60 percent of your health benefits, now I can pay 50 percent."'

Too many smaller companies, Cruz says, haven't made that jump.

"Smaller businesses have fallen into a trap," Cruz explains. Business owners "should sit down with their employees and say, 'We have to share these costs. How can we work this out?'

"The employer needs employee participation. But too many (business owners) are afraid to have this talk."

Cruz is a fan of talking things out. "Someone making $10 an hour may actually be making $15 when benefits are counted," he says. "Employees should realize how much more the company gives them than an hourly wage."

Among the alternatives to a health benefit cost increase:

• Switch carriers, though Cruz notes that switching may not be a panacea. "Every (insurer) offers basically the same coverages, but service levels are different," he says. Service can be especially important when an employee has a major health hit and the insurer's coverage process is balky - or worse.

• Offer voluntary benefits. "Employees pick and choose" the coverage they want and pay accordingly if the cost exceeds what you're willing to pick up, Cruz says. Healthy workers with no kids likely will have the biggest benefit.

• Think about individual rather than group coverage, with the company picking up a share of the cost. Individual policies are good for "single persons who are young and very healthy," Cruz says. On the other side of the equation, "A 50-year old is going to have a higher rate" outside a group.

• The greater risk, however, may be that an employee develops a health problem and becomes uninsurable - the dreaded pre-existing condition - except in a group. And your business no longer has group coverage.

• The "employee" could even be you.

JKendall@121MarketingResources.com.

© 2007 121 Marketing Resources, Inc.