Health Insurance for Employees

      Shop owners discuss the ins and outs of employer-sponsored health insurance plans. November 10, 2005

Question
The shop I work in is considering getting health insurance for employees. Some employees are covered by the spouse’s policy and don’t need it, but some do. As an average, what percentage is picked up by the employer? The insurance agent looking into the coverage only speaks of Kaiser – is there any other company? We have five or six employees looking for insurance and we don't really expect the employer to pick up any of the cost. Does anyone have any ideas on this subject?

Forum Responses
(Business Forum)
From contributor A:
Get ready for sticker shock. My wife’s coverage is paid for by the school system where she works, and the rest of the family is covered by premiums paid through a payroll deduction. Spouse and one child or ten children - it doesn’t matter - is around $600.00 per month. This is a group policy with about 124,000 school system employees. If your employer can afford to pay any amount on your behalf you should count your blessings. The general population is unwilling to pay premiums because they don't believe the insurance cost of the skilled craftsmen working on their projects should be their responsibility. They love our work, but they don't want to pay for this important benefit. To answer your original question, if your employer was able to pay 50%, that would be a fair starting point. Maybe the jobs are priced at a point that they are able to pay 100%. There are many insurance providers so I would suggest getting three quotes from three different agents.



From contributor B:
If your company is a member of a Home Builders Association there are a few insurance companies that offer both individual and group rate discounts.


From contributor C:
Has anyone heard of CMA or AWI helping to bring about better insurance plans - health or otherwise?


From contributor D:
For the last few years I have been searching for a package of insurance benefits for our members. This has been more difficult than I can explain in the space allowed. I have found a few stop-gap plans but have not found an all inclusive plan that would fit all our members’ needs and locations. Recent Federal changes will most likely help as soon as they are all in place. I hope to have some news by AWFS so keep an eye out for the announcement.
Charles Wilson
President
Cabinetmakers Association


From contributor E:
I'm in Northern California and I run all my employees through a leasing agency. I do the hiring and firing, and they take care of all the rest - cutting checks, workers comp, IRS deadlines, etc. They have two health care options - Kaiser and Blue Cross, and a 401K program. I save more on workers comp and health care than what I pay for their fee (4% of pay roll) - and all we do is fax in a timesheet. As for what we pay, we offer health care to all employees after 60 days, and we pay 75%. If they choose not to take it, we offer them $100 a month.


From contributor F:
With a small shop of less than ten employees you are placed in a pool – a collection of other companies that do something close to what you do. If your company offers insurance, remember they are paying rates based on a collection of thousands of companies in the general area, regardless of loss rate, rather than the company that you work for. You cannot even imagine what it costs to provide insurance for our field. As a test, call multiple companies and request a premium for just yourself. Let them know that you work with saws.

To contributor A: You have no idea what it costs to insure an entire family on a group plan. $600 a month is cheap, particularly for 100,000 employees. Multiply that times two or maybe three based on area accidents and that is the rate for smaller shops.



From contributor G:
The company I represent just implemented health care benefits, as well as dental, long term disability, accidental death and dismemberment and life insurance. I was on the board that decided on the benefit package, and it was a difficult decision. We had opposition from a number of employees on the floor, but the majority supported the package and its content. My advice to you would be to push as hard as you can for the betterment of your employees. The company will benefit from employees with benefits! We are lucky to have an owner who supports his employees and agreed to pay half of the premium, but even if he had not, it would still be good for the employees. Try to sign up with a provider who has multiple small shops signed into one pool. Some people feel that it is an expensive route to take, but through my research, and looking at the rates for small shops, it is the least expensive option.


From contributor H:
Depending on what state you are in an employer may be required to pay a portion of group plan insurance. In New Jersey it is 10%. Also, to maintain the tax deductible status of the plan you must treat all employees and management equally, providing the same plan options and percentage paid by company. I would suggest that a company pay cost for employee, with spouse/family coverage available thru pretax deduction from his paycheck. Any employees having other coverage may opt out, but they still count as part of your group quota.


From contributor I:
There is no standard for percentage of coverage paid by employer. The range is anywhere from no coverage at all for employees to paying 100%.We had none when I first started, then we got it and I paid part. Now I cover 100% of all plans. There are many companies. Call up several insurance brokers and have them bid for your plan. Let them know they are bidding against other carriers. Most brokers handle multiple carriers. Costs are expensive even with basic plans. Next years cost should set an all time % rate hike. The past two years’ raises have gone to insurance instead.

Our plan monthly cost right now:
Single $248
Employee and spouse $535
Family plan $740

For me and 4 employees we pay over $30,000 a year. If you need insurance and have to get it on your own, be prepared for even higher rates.



From contributor J:
The only thing I would add is that any true group employer-sponsored coverage requires some level of employer contribution. It may be only 25%, but there has to be some employer contribution. Of course, insurance premiums are really just another form of compensation, so any employer who doesn't want to incur additional cost could always reduce wages to compensate for the nominal required employer percentage so that total compensation remains the same. That solution wouldn't be popular with employees, and if the insurer knew about it up-front, they probably would decline to issue the coverage.

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