Start with Questions
A review of some of the questions relevant to health-care insurer selection will assure no important part of the equation goes unnoticed. The questions, to consider, as outlined by Inc.com:

1) Is it time to look for competitive bids?
2) Can I see my company's claims history?
3) Should I get a re-rate?
4) One of my employees has a serious disease. Can I do anything to keep my rates down?
5) How much are prices rising in my region?

The answers:

1) If you don't routinely review what is available in the market, you may miss an opportunity to achieve greater value for the investment. Also, knowledge is power. If you know the going rates, you're better able to negotiate with any current or potential provider.
2) You can't see the claims history by individual but you can look at types of health care your employees are using to look for patterns.
3) If you keep track of health care provider usage, and see that it's less than you expected, you might want to ask for a re-rate and save money. The flip side is that if your employees have been using more than estimated, you could suffer higher rates.
4) Prevent costly emergency visits by inducing employees to take advantage of preventive care and undergo testing routinely. This can be accomplished through varying co-pays.
5) Again, if you know the regional market rates, you're in a better position to negotiate.

Brokers and Other Benefits
Like health care, many potential employees will ask about other benefits during interviews. The possibilities are many, so reliance on a broker can help you gain the expertise you need. Brokers, like other consultants, expect fees. You need to ask and compare before selecting a broker.

"Comparison shop your broker services," says Inc.com. If you expect business growth, or shrinkage, changing brokers or fee structures could lead to savings and better value.

Market Analysis and Budget
Assume employees and job applicants know what's above, average or below normal. Ask your broker for data from a comparative market analysis. He or she might then ask how you want to position your business — in other words, reveal your budget. If top talent leaves or the best applicants don't sign on, replacing them might cost more than offering great benefits.

Communicate Co-Pays
Once you've made these decisions, communicate clearly with employees and candidates about what "their portion of benefits will cost them," says Inc.com. Here again, if you read the market analysis, you'll probably feel more comfortable knowing the choices you made will provide the best compromise between retaining/attracting talent and minimizing costs.

Help from Uncle Sam
One more thing: the government helps companies save on health care costs. Section 125 of the Internal Revenue Service Code permits employers to establish programs that allow employees to make contributions towards the cost of health insurance and to pay for health-care services with pre-tax dollars through a flexible spending account (FSA). Businesses and their workers save 7.65 percent in FICA and Medicare tax, and employees save on taxes by lowering their taxable income.

Yet while 92 percent of large firms (200+ workers) are likely to offer this benefit, only 60 percent of small firms (3-199 workers) are likely to participate, according to the Kaiser Family Foundation. A smaller percentage (22 percent) of offering firms offer an FSA, but again, large firms are more likely to offer this benefit than small firms (73 percent versus 20 percent).

Rather than just as a cost to your business, you could look at health benefits for your employees as a "unique selling proposition." If the benefits you provide outshine those offered by your competitors, the value lies in differentiation. This can go a long way in attracting and retaining top talent and making up the health-care costs in increased long-term growth and revenue.

Additional: Health Insurance for the Self-Employed
Some business owners forgo health insurance to put every available penny into their business. Others face paying high prices or making a concerted effort to find the best possible value. For freelancers, too, one of the biggest downsides is a lack of health benefits.

Is anybody more preoccupied with health insurance than the self-employed? And rightly so. Unfortunately, annual health insurance rates only seem to increase, and dramatically, each year.

Regardless the size of business, selecting health insurance providers requires time, careful questioning and analysis. The following are some resources to consider for additional information on insurance for the self-employed:

1) ehealthinsurance.com;
2) The Freelancers Union;
3) New York Department of Insurance's Healthy New York;
4) State Coverage Initiatives;
5) The Small Business Service Bureau;
6) AARP (for those over 50);
7) Web Worker Daily
8) Local chambers of commerce; and
9) Industry-specific trade associations (e.g., the bar association or the Institute of Electrical and Electronics Engineers)

If any of our readers have additional thoughts on health care for the self-employed or small-business owners, please share them in the comments section below.

Resources

Smart Questions: Health Care: How to Get a Better Deal
by Sarah Goldstein
Inc.com, November 2007

Review Your Employee Benefits
by Will Helmlinger
Inc.com, Nov. 27, 2007

Employer Health Benefits: 2007 Summary of Findings
Kaiser Family Foundation and Health Research & Educational Trust

Finding Health Insurance if You Are Self-Employed
by Marci Alboher
The New York Times, March 27, 2008