Health insurance premiums are based on likely medical expenses, and overweight workers usually incur more medical costs than smokers or problem drinkers. 

Charging extra premiums to smokers has been around for a while, and now health insurers are adding a charge (frequently about $20/month) for being significantly overweight.  

Obesity is the most expensive challenge for companies too, costing US employers $45 billion annually through medical expenditures and work loss according to The Conference Board.  Some companies are actively trying to help employees lose weight and become healthier with a variety of programs:

• Offering seminars and classes on healthy eating
• Adding an exercise room in their offices
• Replacing high calorie snack foods with healthier choices in vending machines
• Carefully choosing healthy menus for company events
• Cash incentives and prizes for weight loss
• Subsidizing memberships to local health clubs

Some companies have happily found that having a wellness program makes a great recruiting tool to attract and keep superior employees.  That’s one great reason by the end of 2008 nearly 65% of all companies are expected to offer some sort of an obesity reduction or prevention program.

More drastic measures, like offering bariatric surgery, haven’t proven cost effective yet, since most employees change jobs before employers recoup surgery costs.  Employers also have to be careful about discriminating against employees with weight issues – there’s a host of ADA requirements here.

As an employer, especially when you are shopping for small business health insurance, consider what you can do to help employees manage their weight – your premium savings will definitely help to balance the cost of any program.

As an employee, remember that your choices in food and exercise can not only save you money each month for health insurance, but can improve the quality of your daily life.

You’ve probably got a mental list of things already.

This is a great time of year to get your website in shape, especially with Christmas just around the corner. 

• Make sure your contact information, store hours and product lists are up to date.
• Remove any old products you no longer carry, and highlight the things you know will be hot during the 4th quarter. 
• Is it time to update the look of your site?  A few new graphics can really renew the energy level, and give repeat site visitors something fresh to look at.

This could be the perfect time to clean out the file cabinets.  Make sure to shred everything containing account numbers or private information.

Things to Review to Save Money for Your Small Business

Review choices in vendors and products – could you find suppliers with better products or deals?  It never hurts to ask.

Review your operating costs.  A good place to start is your insurance coverage.  Do you have the protection you need?  Consider adjusting deductibles, modifying coverage levels, and confirming policy provisions based on any new equipment purchases or technologies which could leave you vulnerable.

Make sure you review your small business health insurance policy too.  Make sure that records are up to date on employees and their families.  Set up a small committee to shop around for quotes to see if lower cost coverage is available.  Consider changing the deductible and see how that affects the cost. 

You’ll be amazed at the difference raising the co-pay can make in health insurance premiums.  In fact you could come out significantly ahead by raising the deductible and co-pay, then giving your employees a small allowance to make up the increase.  Odds are they won’t spend the full difference, and the good will you create among your employees will be a nice bonus.

So instead of looking at this slow period as a negative thing, consider it a huge opportunity to tune-up your business.  Remember, attitude is everything.

How do they do it?  By using a variety of tactics to encourage employees to participate in the process, from helping to choose the medical insurance company to building a “culture of health” which encourages employees to take care of their personal health.  Regardless of the size of your company, you can employ these strategies to lower the cost of employee health care too.

Select a committee that includes both management and employees to shop for health insurance.  This enables everyone to fully appreciate the costs involved and is much more likely to generate full buy-in from everyone covered by the program.  Many employees are unaware of the hefty cost of health insurance, so make sure that their representatives keep all informed of the tremendous value of this benefit.

Make employees more accountable for the health care decisions they make.  For example, offer coinsurance rather than co-pays; by making the money spent on things like annual doctor’s visits come from an employee’s fund, he or she is more likely to shop for the best deal rather than just accept whatever is provided for their co-pay.  Whole Foods has enjoyed wonderful results from this tactic.

Measure the results to manage costs.  Before selecting a program for the new year, review what services were actually used in the prior year.  Did employees use the expensive prescription drug coverage, or would the lower cost of generic coverage save everyone money?  Were extras like pregnancy, mental health, or substance abuse programs used?  Evaluate each option for its benefit and pare coverage to those items used most.

Encourage healthy habits among employees.  Include healthy options, such as granola bars in the snack machine, and choose wisely when department lunches are brought in.  Sponsor a company softball team, or lead lunch hour hikes around the office complex.  One of my old companies organized a “walk” from Denver to New York City.  Each employee would walk a distance each day, then report the mileage to the walk coordinator.  When our combined distances covered the length of the trip, we celebrated with a healthy meal sponsored by the company.  Everyone participating developed the exercise habit and lost weight at the cost of a team lunch.  Smart move!

While these ideas may be easier to implement for larger companies, there are many ways to adapt them and save money on small business health insurance too.  Brainstorm for ideas to make your office a healthier place.  You’ll reduce the number of sick days, increase camaraderie among employees, and best of all, reduce the cost of employee health insurance.

Employers subsidize 78% of premium costs while employees pay 22% plus the co-pays, deductibles and coinsurance costs.  Expected 2008 co-pays should be about $20 for a regular doctor visit and $30 for a specialist.  Prescriptions average $10 for generics or $25 for brand-name drugs.

Overall, however, as benefit values decrease and out-of-pocket costs increase, though the premium cost share remains the same, employees will spend about $156 more next year for the same health insurance services. 

Fewer companies (only 47%) are subsidizing retiree medical coverage, and they are asking retirees to increase their contribution to the cost.  Most retirees will be asked to increase their share approximately 8%, making their portion 50% of the overall cost.  Experts forecast this shift in supporting active employees at a greater level to result in older workers remaining in the work force to receive employer-subsidized health care.

Some companies are experiencing much smaller increases in their health care costs because they have actively taken steps to control many of the factors involved in calculating premiums.  These companies are called “high performers” by Towers Perrin, and mirroring their actions can benefit any company, whether you have a Fortune 100 giant or a Mom & Pop shop.  Tomorrow we’ll discuss the changes made by “high performers” that can reduce quotes for both large and small business health insurance policies.

Whether they are covered by a large group health insurance plan or a small business insurance plan, employees consider health insurance as a source of peace, knowing that their family is protected medically should anything happen.  At the same time, employee health care coverage has become a huge cost for employers, averaging over $4200 for individuals and $11,000 for families in 2006. 

Few companies are covering the full cost of health insurance benefits anymore; in fact, employees are being asked to contribute more each year towards the cost of their health insurance, especially as costs continue to rise each year.  Still, most find a way to do so, knowing that they and their families are better off with health insurance than not.

Companies with as few as three employees, and as many as 50 employees, qualify to purchase insurance under guidelines for small business health insurance.  In addition to keeping employees happy, there are many tax benefits which help defray the cost of health insurance.  There are also many ways to save money on small business health insurance, with just a little bit of effort. 

If you own a business and have to choose between larger pay increases and maintaining health care coverage for your employees and their families, don’t assume that larger raises would be everyone’s first choice.  Make sure to let your employees know the cost your company pays for their small business health insurance coverage; it will surprise many of them to see just how much it costs, and give them one more reason to be happy on your team.

There are eight specific conditions itemized in the rule:

• Blood incompatibility
• Air embolism
• Falls
• Mediastinitis (an infection after heart surgery)
• Urinary tract infections from using catheters
• Vascular infections from using catheters
• Pressure ulcers (bed sores)
• Objects left in a patient during surgery

Hospitals must begin reporting these conditions on October 1st of this year, then starting on October 1, 2008, they must absorb the cost of the treatment required to address these preventable situations.  At least three more conditions will be added to the list next year. 

Most experts agree that while these problems are usually not an intentional act to increase the hospital bill, estimated taxpayer savings will easily be hundreds of millions of dollars within the $408 billion Medicare program. 

The implications of this are huge for health insurance providers as well.  Every dollar paid out to cover hospital mistakes affects our health insurance premiums, whether we have individual health insurance or are part of a group health plan.  Now that the hospitals must pay for their mistakes, hopefully patient care will improve as well.  Ultimately this may be a first critical step toward reigning in the cost of healthcare.

Employees with a body mass index (ratio of height to weight) over 30 will pay an extra $10 per paycheck for being overweight.  If they smoke its $5 more, and if their cholesterol, blood pressure or glucose is high, then add another $5 – each! 

Clarian has decided that being forced to actually pay for bad habits is more effective than just encouraging workers to take better care of their health.  (A letter from their doctor stating that a medical issue is beyond an employee’s control will have the extra fees waived).  Of the 8,000 employees enrolled in the company’s health plan, about a third are obese and a quarter use tobacco. 

Finally there’s a way to incorporate a little personal responsibility into health insurance premiums.  Many people make the choice to eat poorly, to smoke, or not to exercise.  Their health suffers as a result, which leads to higher medical expenses.  Now those individuals will help to defray those costs. 

Have no doubt, other companies are watching closely to see whether this plan succeeds, and what kind of legal challenges surface, such as possible Americans with Disabilities Act (ADA) issues.  Though it will be a few years before we know whether or not this proposal is successful, it certainly will shake up the world of employee health care.