 |
Many of my friends consider Caroline Valentine, of Valentine And Associates, the first person to call when they have high-level HR/staffing needs. The last few times we’ve had lunch, I wished I had a recorder with me. Following a recent conversation about insurance, I wrote some of my questions down, and Caroline responded. |
Lynn Bender: Last time we met, you had mentioned several strategies which startups can use to reduce their per employee health insurance premiums. Could you elaborate?
Caroline Valentine: The most common strategy is to provide a plan or plans with higher $ deductibles and copays. For this to work and not result in a mutiny of the current employees on increased out of pocket expenses or higher salary offers to prospective employees to compensate, it must be accompanied by some form of pre-tax savings account – either an FSA (Flexible Savings Account) or HSA (Healthcare Savings Account). There is a third type, HRA, which is not commonly used, so I wont elaborate on it.
The difference is pretty simple. An FSA allows for pre-tax deductions to be used within the calendar for any healthcare related expenses. The catch of course is within the calendar year – it’s a use it or lose it plan. An HSA allows for pre-tax deductions to be used anytime needed. The employer and employee can both make contributions to the account. It grows over time and eventually can be transferred to a mutual money account (from simple savings) and then can operate as a retirement fund, participants are forced to pull money out after a certain age – but not just for healthcare related expenses- check out the links below for additional details on how both plans work -
http://www.ustreas.gov/offices/public-affairs/hsa/
http://en.wikipedia.org/wiki/Flexible_spending_account
If your company doesn’t already offer one, ask about it – the plans save $ for companies as well so your HR or accounting departments should be happy to hear you are interested.
Bender: Many of my friends work as independent contractors. Some are employed through a headhunter/recruiting firm, and have their insurance included through the firm. However, some firms provide no such coverage. Do you see any trends?
Valentine: As we all know, insurance costs are continuing to escalate upwards. For most firms, the solution is higher deductibles and co-pays, which I discussed in the answer to the previous question. As it becomes more difficult, we might see fewer firms willing to deal with the headache. On the other hand, if more consultants and contractors request (or even demand) access to benefits as a condition, the firms might reconsider. The size of the firm, types of clients and the firm’s financial stability are also factors to consider.
Bender: For IT pros who must seek coverage on their own, what do you suggest? I know that BCBS was offering individual plans, but for individuals over 45, the cost becomes prohibitive. Is it always better to find a group plan?
Valentine: Most of the major/national healthcare providers do offer individual plans – BCBS, Humana, United Healthcare, Assurant, Cigna, and Atena. Additionally, there are local and regional providers including Scott & White. It is important to research all of the available plans in your area and get a quote if you can. The process of determining rates is not an exact science and can varying greatly from provider to provider. It is not always better to find a group plan, but most of the time it is. Many organizations are providing members with access to healthcare plans – IEEE being one of them. There are many more – first step is identifying organizations focused on independent consultants as a core membership and it being a group you are interested in joining.
Bender: The idea of coworking has been getting a lot a press recently. For those starting or participating in a co-working venture, are there any special considerations?
Valentine: Coworking is different from simply renting space in a “business office suite” type of environment with a desk, door, receptionist, and conference room. The underlying intent of co-working is to create and foster community and communication – my advice would be to know that is a guiding principle, know yourself and how much community and communication you are seeking, and know what you want to give to and get from the arrangement.
