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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
August 2005

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Management

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Employee benefits: Health coverage


Multiple choice

by Matt Krumrie   The key to controlling group health insurance costs is to engage employees in their own health care, which ultimately saves money for both employees and their employers.

That was the key message at a May conference, “Business Leaders Forum on Consumer-Driven Healthcare,” sponsored by Associated Financial Group of Minnetonka and attended by small-business leaders from Minnesota and Wisconsin.

Based on 169 surveys collected, 93 of those responding said they were somewhat likely to implement a Health Savings Account (HSA) at their company in the next two years, while 63 said they were very likely.

Only three indicated they already had an HSA implemented — a figure that is likely to change at a rapid rate in the near future, says Rex Kohl, a business insurance adviser for Associated Financial Group.

Kohl says HSAs are the most positive option for small businesses in health care coverage in decades. “This is going to be something that I think most small businesses implement very soon,” says Kohl.

According to Blue Cross Blue Shield of Minnesota, an HSA can be funded by an individual, self-employed person, employer and/or employee for the payment of eligible expenses. Any unused money at the end of the year is rolled over and applied to the next year’s balance.

The funds in the account are owned by the individual or employee. If the employee leaves the company those funds travel along. The money continues to grow and can be used to pay for expenses in retirement.

An HRA, or Health Reimbursement Account, is generally a “promise to pay” by the employer. An amount is allotted to the member for payment of eligible expenses to offset the deductible. Usually any unused money at the end of the year can be rolled over and applied to the next year’s balance. The funds are owned by the employer and will not follow the employee if they leave the company. Individual and self-employed purchasers cannot participate in an HRA.

According to the Business Leaders Forum survey, 77 respondents indicated they were somewhat likely to implement an HRA in the next few years, while 49 said they were very likely, 28 said they were not likely, and four already had one in place.

Cost-conscious
The key to stabilizing health care costs comes down to the consumers — the employees — understanding the actual cost of their health insurance plan, and understanding how they can help lower those costs, which in turn saves them money, says Kohl.

Doug Luick, an account executive for Unison Benefits Management in Minnetonka, says that HSAs aren’t the cure-all for every small business. Luick agrees that consumer-directed health plans, as HSAs, HRAs and similar plans are known, can be a great option for any sized business to consider. But each employer has different characteristics that make one type of plan (HRA/HSA/traditional plan) a better fit, he says.

What attracts many small-business owners to these types of plans is that they can have more control over their actual health care costs versus the traditional model, says Luick.

A lot of Unison’s smaller clients (50 or fewer employees) who are offering an HSA tend to do so alongside a traditional plan, as part of a “cafeteria-style” approach to benefits.

The employee receives the same defined amount of premium contribution from the employer, and the employee decides if it's worth paying more for the traditional plan, or taking those premium savings and putting them in the HSA.

“The employer is empowering their employees to make their own decision,” says Luick. “Thus employees tend to be happier because they now have choices to select from.”

The actual hard dollar costs to implement an HSA are about the same as implementing a flexible benefits plan, says Luick. However, the employer does need to be aware of the additional time needed to educate employees.  The key here is to be working with an agent or consultant who has experience in implementing these plans and who also embraces the concept. 

“In the past when we do our annual employee benefits meeting we typically spend 30 to 45 minutes reviewing the benefits with the employees,” says Luick. “However, if an employer is offering an HSA our meetings have increased to two hours with spouses sometimes attending.

“Education is the key in getting these plans off to a successful start, so there are a lot of soft dollar costs on implementing these plans. But the end result tends to be happier employees.”

One employer’s switch
Doug Turk is president of Plymouth-based Midwest Rubber Service & Supply Co., a 45-employee company that produces custom fabrication, belting & conveyor products, and precision die cutting. He recently switched from a plan that included a co-pay with a traditional health plan, to a plan that offers both a traditional co-pay plan and an HSA.

The company now also offers $3,600 to any employee participating in a cafeteria plan. As a result, benefits costs increased, but to accommodate this the company adjusted the planned increase to cash compensation.

“In the future we will be able to control costs by adjusting the cash and benefits portion of compensation accordingly,” says Turk. “I really think this is a positive step in managing costs, and I think a trend that will continue to grow.”

In order to help employees better understand the pros and cons of HSAs, Kohl worked with Midwest Rubber employees to lay out each individual’s personal plan. Kohl printed out a chart for each employee that showed the financial impact of the HSA. Kohl also explained how to improve overall wellness and prevention, how to eliminate some medical expenses, and provided a personalized statement to each employee explaining the costs and what their premium savings are with the HSA.

“The plan works well for healthy and sick,” says Turk. “We recognize that wellness equals savings, but for those with chronic problems, the high-deductible plan will cover 100 percent after the deductible is met. The quality of care is just as good, now the employees have the opportunity to manage their funds.

“You have to help employees truly understand that the HSA will benefit the employer financially as well as the employees financially, physically and mentally.”

Other add-ons
Another popular part of health benefits plans is dental care. According to Delta Dental Plan of Minnesota in Eagan, about 40 percent of small employers in Minnesota offer a dental plan (in 1970 six percent of the U.S. population had dental insurance).

Mark Moksnes, Delta Dental executive vice president of sales and marketing, says dental benefit options have grown more plentiful and more flexible in recent years.

The introduction of voluntary (employee-paid) and partially voluntary (employer- and employee-paid) dental benefits has gained popularity. Typically, users get a better rate through a voluntary plan that is group-sponsored, says Moksnes.

Another idea is to participate in a pooled product, which features a standard dental benefit offering used by multiple groups to help share the cost and spread out the risk.

Delta Dental recently introduced Individual Dental, an individual dental benefit plan for Minnesotans age 25 and above. This is an option for sole proprietors or for small businesses that wish to offer it to their retirees or part-time employees. (Most group dental plans require a minimum of five employees, Moksnes says.)

Luick says most of his clients are more concerned about learning about HSAs, and that dental plans seem to be a small piece of the pie. He adds there are more dental products out there today, both employee- and employer-paid, that can round out a benefits plan.

The same can be said for other health-related options, such as coverage of prescription medication and vision care. Marybeth Voves, in the employee benefits division of Bloomington accounting firm EideBailly, says the best way to gauge employee interest in benefit options is with a simple survey, asking people to rank their interest in different benefits.

The bottom line to managing health care, says Kohl, is to understand the importance of managing costs. Most small businesses can adequately fund what the plans cost today, but they recognize they can't keep absorbing increases.

Kohl recommends a method for management: Implement a true cafeteria plan, which fixes the employer funding cost on a per-employee basis. Then the employer provides access to at least two health plans, at least one of which is a high-deductible plan.

This provides employees with options, takes the employer out of the benefits business and focuses their attention on managing total compensations cost.

“The use of consumer-driven plans now gets employees in touch with medical costs and starts them down the road of consumerism,” adds Kohl. “If they stay with traditional first-dollar coverage, they pay the higher premiums.

 “If they use a consumer-driven plan, they can manage expenses by how much health care they consume. Everyone still has access to high quality catastrophic care.”

[contact] Rex Kohl, Associated Financial Group: 952.945.0200, ext. 794  rex.kohl@associatedfinancialgroup.com ; www.associatedfinancialgroup.com. Doug Luick, Unison Benefits Management: 952.345.2305, luick@unisoninc.com; www.unisoninc.com. Mark Moksnes, Delta Dental Plan of Minnesota: 651.406.5900; mmoksnes@deltadentalmn.org; www.deltadentalmn.com. Doug Turk, Midwest Rubber Service & Supply Co.: 888.850.0206; dturk@midwestrubber.com; www.midwestrubber.com. Marybeth Voves, EideBailly: : 952.918.3631; mvoves@eidebailly.com; www.eidebailly.com