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Sweet marketing music

Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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by Andrew Tellijohn
March 2007

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Employee benefits

business builder employee benefits  

Get everyone talking
about benefits to
cut costs, add value

by David Cornell  

I RECENTLY WORKED with the owners of a small restoration company to review their health benefit plan.

The owners, who were in their 60s, thought the plan they offered employees was wonderful because it paid 100 percent on services such as a hospital stay. What they didn’t notice was that two-thirds of their employees didn’t take the plan because the premiums were unaffordable in relation to their salaries. This benefit wasn’t really serving their people.

If your company is offering benefits as a service to employees or to attract talent, one size no longer fits all. The future of employee benefits is customization. This requires taking insurance carriers and brokers to task annually, but it also means that business owners and employees have to get in the game.  Benefits are a right, not an entitlement.

To change the trend in double-digit health benefit increases, small businesses need to rant, or better yet R.A.N.T, about the costs of health care. Following are four crucial steps.

Realize the costs
It may sound great to only pay $300 per person out-of-pocket for medical care. But that Cadillac plan might cost you $400 to $900 per month in premiums; that’s $4,800 to more than $10,000 per year! 

When you realize statistically that the majority of Americans only use $500 to $2,000 in health-care services a year — based on annual average claims — the money paid above and beyond that is lost wages.

Your company’s health-care costs and the cost of providing the benefit are unlike any other company.  A major role your broker plays is to illustrate the costs of your health plan every year so you can make decisions based on how people are really using it. 

For example, if you have a relatively young and single workforce, you may be better off with a high-deductible Health Savings Account, which allows your employees to save money for health-care expenses they may not incur for several months at a time.

Act on common sense
Healthy people are cheaper. Lower your costs by providing lower cost options. Get employees involved so they know the difference between a clinic visit and an emergency visit, so they use the tools available through their health-care provider before they go to a doctor, so they feel empowered to question recommended treatments and tests.

Reduce utilization. Reduce pharmacy. Offer incentives for dependents to use a different plan if available.

All of these statements are obvious, but each company will need a different solution and every year it may change. One great question to your broker: “What are you doing to help me accomplish the common sense realities?”

Negotiate always, often
By collaborating with your current carrier and utilizing the various markets, you can increase your leverage to either increase your benefit or reduce your costs.   

Negotiate with your employees, too.  Find out if their priority is more salary or more benefits. Find out if they would like different options to save for health care and other expenses or if they prefer a single option.

There are many ways to set up pre-tax benefits, from Flexible Spending Accounts that can be used to pay for day care or dentistry to a payroll deferral for a holiday account. Payroll options that encourage savings may be attractive to employees with families. 

Together, get active
Getting each and every employee in on the R.A.N.T. increases the reality of how much health insurance really costs, how it works and how it can remain a benefit.

Here are areas where you can cut considerable costs:
• Administration and compliance.  From the HIPAA laws to COBRA requirements, employer liability as it relates to employee benefits can be extremely costly and administrative. By outsourcing the administration and compliance of employee benefits to third party administrators, you can transfer this liability and reduce the soft costs of administration. 

• Employee education. Provide accurate information about benefits to reduce anxieties, increase perceived value of the benefit and reduce utilization. Regular correspondence with all employees can be done on-site, on-line, via Webcast or Web-learning.  Employer-sponsored special events such as health fairs and seminars are also effective.

•Employer education. Many new products, services and techniques are available to the employer to reduce costs, improve benefits and increase employee recruitment and retention.

Alternative benefit plan designs, benefit comparisons within like businesses and industries, and a clearly written employee benefit booklet are a few of these.  Talk to your broker.

• Customer service. An estimate by the Medical Billing Advocates of America, which roots out erroneous charges and typos on medical bills, is that 3 of every 10 medical bills contain errors.

Provide instant access to plan and benefit information as well as problem resolution for employers, employees and their family members (translation: those who deal with the doctor appointments and medical bills) to reduce your administrative burden. This also empowers employees to resolve benefits issues immediately and accurately.

• Annual reviews. Your broker should provide an annual market check by taking your existing contract to market for competitive proposals and bids from eligible carriers. Expect your broker to offer strategies to reduce administration costs and to monitor claim rates. 

Are you ready?
Once the owners of the restoration company understood the true costs and value of their benefit plan, they were more than happy to switch to their own plan and provide a separate and more affordable plan for their employees. The result?

They switched their employees to a plan with a Health Savings Account and fully funded their deductible, which covered the employees and saved the company $5,000 in just the first year.

So are you ready to R.A.N.T?

[contact] David Cornell is the owner/broker of Cornell Insurance Services, St. Paul, a group benefits provider for entrepreneurs and small businesses: 612.940.1274; dave@cornell-insurance-services.com, www.cornell-insurance-services.com