Could employer-provided health insurance go the way of employer-sponsored one? Retirement plans?
Rick Lindquist, President of Zane benefits, who specializes in reimbursing individual health insurance for small businesses, says it couldn’t just happen; it’s already happening.
Lindquist and Paul Zane Pilzer (founders of Zane Benefits) argue this case in their new book: The end of employer-related health insurance. As surprising as you may find the title, you get a lot of its subtitle: Why It’s Good for You, Your Family, and Your Business.
Lindquist and Pilzer’s Salt Lake City, Utah-based company is benefiting from a change of employer traditional health insurance and towards their defined contribution reimbursement system. In this model, employees receive a lump sum in cash – say, $ 500 a month – from their employers, asking them to buy a health insurance plan and asking their companies to pay their medical expenses.
Still, I wanted to learn more.
I recently spoke with Lindquist about why he thinks employer-provided health insurance is employee benefits like the now-you-see-it-now-you-not-snapchat.
Next Avenue: Why Are Employers Foregoing Health Insurance?
Lindquist: There will be a massive shift; In fact, we are right in the middle. People categorize this as employers shedding health insurance. Yes, they no longer offer insurance, but they no longer offer benefits. You’re just changing the way they deliver them and replacing them with defined contribution plans. It could save millions of dollars for both employees and employers.
How quickly does this change take place?
In our book, we assume that by 2017, the majority of small businesses that now offer health insurance will switch to defined contribution plans. This is led by small business owners. But it doesn’t stop there.
Some big companies a few years ago [Verizon and AT&T] Leaked documents showing that they are evaluating the discontinuation of health insurance plans. Some big companies are going to drop their plans and it will have a snowball effect. We assume that 90% of all companies will no longer offer health insurance in the next 10 years.
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Why don’t we see more big companies doing this?
You don’t understand Also, the transition comes at a cost: to avoid a revolt, you need to train staff, which is difficult. It will happen.
Why is this happening?
Since the early 2000s, corporate health care costs have grown faster than any other personnel cost. And they’ve shifted the costs onto employees over the past 15 years, with higher deductibles, higher co-payments and higher premiums.
When costs rise, especially for small businesses, employees either stop adopting the plan or they go with their spouse or buy their own. This creates participation problems for the employer and the plan is then canceled by the carrier.
What Small Businesses Do Is To Say: What Are My Choices? Because when a new employee says what my health benefits are, you need an answer. This has led to the development of these programs.
Why do you say they are good for individuals?
Health insurance is one of the most important and expensive products we buy. But who is responsible for the selection? Your employee. You could lose your job and then lose your insurance. Or yours doctors They can cancel attending a health event for you.
This new system is a gift from the employer, especially if it offers an opportunity to save money compared to the old plan. Now you have a choice: you can say, “I want this plan with these doctors” and another member of staff can say, “I want this plan with these doctors.” You can switch to a different plan within a year. When you leave your job, you can take your plan with you.
How exactly does this new system work?
The easiest way is to provide a scholarship. On your paycheck, you might get $ 500 a month in health insurance grants. The problem is that money is taxable; It’s not like group health insurance.
At Zane Benefits we have a solution for that. We are establishing a formal reimbursement program that is compliant with federal tax regulations. We say there’s $ 500 a month, but the only way to get it is if you buy coverage and prove you bought it.
Tell me how these plans compare to employer-provided health insurance in terms of coverage and costs.
The key is that you can have anything you want when you shop in the single market. And now you need to be an educated consumer.
How much money does the employer give the employee?
It varies. But in every situation, the employees are the same or better off than before. The policies can cost 20 to 60% less depending on age and location – up to 80% less if you are a low wage worker and your income is less than 400% of the poverty line.
Is the coverage better than the employer’s?
It’s up to the employee. Let me use an auto analogy: you can buy a Ford or a Maserati; a plan for bronze, silver, gold or platinum. You can find a policy with coverage that is comparable to yours.
What does this all mean for people in their fifties and sixties who are not yet on Medicare?
Healthcare is the greatest threat early retirees. One of the messages in our book is that if you’re an early retiree or looking to retire and rely on your employer to offer you health insurance when you retire, you don’t plan on doing so. When they cancel health insurance, they cancel retirement.
How should employees faced with purchasing insurance in this way do so wisely?
You can’t make a huge mistake as there are minimum standards that every plan must cover. The biggest mistake is not choosing the right network of doctors. If you don’t see a doctor much, you can come up with a bronze or silver plan. If you need a lot of health care, you’ll want a gold or platinum plan.
After selecting coverage, conduct a provider search to ensure that the doctors you want are covered by these plans.
What would you say to people who don’t like this idea?
The fact is, like it or not, the current model of group health insurance is unsustainable. There has to be something. Just like with pensions.
Richard Eisenberg is the Senior Web Editor for the Money & Security and Work & Purpose channels of Next avenue and Assistant Managing Editor for the site and a contributor Forbes. Follow him on Twitter @ richeis315.