How can I provide reasonably-priced health care insurance to one employee?
January 25, 2012 12:44 PM   Subscribe

How can I -- as an employer -- provide reasonably-priced health care insurance to one employee? Doesn't the issue invite age or gender discrimination?

I have had personal assistants on and off for many years. I've never provided health care insurance, but it is something that I'd like to consider with my next employee. I know how much private health care insurance is for myself -- though I am on my wife's employer's plan at this time -- and that amount is reasonable.

My concern is that employees not like me -- healthy and in my mid-30s -- would cost much more. When my mother sought private health care insurance in her 60s after breast cancer, the monthly cost was absolutely staggering. If she applied for a job as my personal assistant, I couldn't have afforded to hire her if I were offering insurance coverage. I suspect that larger companies are able to average the costs of each employee, or rather, that the insurance company's actuaries do that task for the employer. That won't work for me.

So, (1) does anyone have experience seeking an employee to fill a position for which you offer health care insurance; and (2) how do you avoid hiring those least likely to use health care insurance?
posted by starkraven to Work & Money (14 answers total) 3 users marked this as a favorite
 
IIRC, you really won't be able to get a "group" health policy for one employee, so you may want to price out a reasonable individual plan and give your assistant an allowance for that amount.
posted by Oktober at 12:50 PM on January 25, 2012 [1 favorite]


This is something that is covered by the new healthcare act -- by 2014 states are required to have pools/exchanges for small business owners (limited to business with a max of 50 or 100 people, which obviously you would qualify for) to all buy into together. This doesn't help you today, as I don't think Colorado has one yet (assuming your profile location is correct), but in the next couple years this problem should solve itself (politics willing...)
posted by brainmouse at 12:50 PM on January 25, 2012 [3 favorites]


This doesn't exactly answer your question, but what I have seen people do in similar situations is to offer a health insurance stipend. Basically the idea was that you give the employee a set amount of money a month designed to go toward their health insurance, but the employee does their own shopping. Then you stay totally out of the loop.

On preview, yeah, what Oktober said.
posted by mjcon at 12:51 PM on January 25, 2012 [1 favorite]


I'm assuming that you're in the US. The way you do this is by joining a bigger group, which is easy to do by using a staffing company of some sort. You either "outsource" the entire staffing to the agency, or your employee's have some sort of dual-employment thing going. Insperity is one such company, though there are probably others that I'm not familiar with.
In our case, even after giving Insperity their cut our costs dropped significantly and what we were offering as benefits increased. We're a very small company in an industry dominated by large multinationals, and the cost to be competitive was prohibitive. This solved that for us.
The employee is now part of a significantly larger group, so really you don't have to worry nearly as much about the likelyhood of their using the benefit.
posted by Runes at 12:52 PM on January 25, 2012


I worked for a tiny company once which just granted us an allowance for health insurance and we only had to show that, yes, we were actually buying health insurance. It covered up to $X of insurance costs per month. Anything above that (either because of your risk level or your chosen coverage options) was out of your own pocket. This neatly side-steps the issue of user cost.
posted by introp at 12:53 PM on January 25, 2012 [1 favorite]


(on review, I have no idea whose profile I clicked on that said they were in Colorado, but it clearly wasn't yours... so look into your state and see if they have created their exchange yet).
posted by brainmouse at 12:54 PM on January 25, 2012


Basically the idea was that you give the employee a set amount of money a month designed to go toward their health insurance, but the employee does their own shopping. Then you stay totally out of the loop.

Playing devils' advocate, there are two issues with this--first, if you're just raising their salary and telling them they can use it for health insurance, they're missing out on a hefty tax break that they'd get if they were purchasing it through an employer-based plan. (Having health insurance as a nontaxable fringe benefit through work automatically cuts between 15% and 28% of the cost, depending on your marginal tax rate.) Second, the types of consumer protections you get in the individual market are far, far less than what you get through an employer-based plan.

If you can find a way to join an association or other group that exists for the purposes of banding together and buying insurance as a large group (with pooled risk), your employee will be a whole lot better off. You will as well, as the money that you contribute towards their premium is exempt from payroll tax (win-win!).
posted by iminurmefi at 1:00 PM on January 25, 2012


Oh, and you are aware of the small business tax credits available under the new health reform law if you offer health insurance to your employees, right? If you're not, it's definitely worth looking into, as that could potentially defray a big portion of the premium costs.
posted by iminurmefi at 1:06 PM on January 25, 2012


I'm on the employee side of this, and my boss basically told me to shop around for insurance myself, and then submit the bill every month to him. He writes the check, I mail it out, and voila I am insured, without having the money subject to payroll tax. My premium is pretty low since I'm young and have no real health issues, but if my premium had been crazy high, then my boss would have paid for a set amount of the premium instead.
posted by yasaman at 1:08 PM on January 25, 2012


In some places you may be able to access group health rates by joining your business to a chamber of commerce or similar organization.
posted by meinvt at 1:12 PM on January 25, 2012


If you can find a way to join an association or other group that exists for the purposes of banding together and buying insurance as a large group

...

In some places you may be able to access group health rates by joining your business to a chamber of commerce or similar organization.

This is exactly what my (3 person) company does. It's run through the state chamber of commerce, and it pools together a bunch of smaller companies.
posted by milkrate at 1:18 PM on January 25, 2012


I used to work for the home office of a big insurance company, bidding new small-group work for our agents. My best suggestion is to talk things out with an insurance agent - sit down with a real person, tell them the truth about what you're trying to do, and see what they can come up with. If one says no, impossible, ask another guy. Particularly the independents -- they make their money when they sell, so they've got incentive to find something that works for you.

This was a few years ago, but I can say that at that time we had more than one single-employee "groups". The reason you end up with a "group" with only one person is when the rest of the employees eligible for the coverage decline coverage for one of the acceptable reasons. So, for example, your "group" would be you and your assistant -- two employees -- but if you get insurance through your spouse, then you decline the coverage, leaving only the single employee on the "group" plan.

The benefit of being a small employer on a group plan is that most insurers pool all small-group insurance together, so it keeps everybody's rates down. Not necessarily better than individual insurance for some people, but definitely better for many.

But, insurance companies might not be willing to work with you that way; how they define a "group" may vary by company and state law, so don't take my example as universal fact. Also, the amount you contribute may vary, too. Some companies only require an employer to contribute half of the single rate, so if paying the full single rate is too expensive for your company, talk to your employee and see if they'll contribute the balance.

Also: talk to your local Chamber of Commerce; chambers often have a small-group plan for chamber members. Or, if there's a professional association for the type of business you do, they may offer pooled insurance as well. Sure, it means membership dues, but it might be a wash when it comes to the difference between individual insurance and the group insurance rate.
posted by AzraelBrown at 1:19 PM on January 25, 2012 [1 favorite]


Employee of a small company here. Our policy is after six months, you are entitled to $ xxx per month towards health care reimbursement. You just have to show proof that you pay monthly health insurance (we choose which health insurance we want ourselves) and we are given a separate check to reimburse us at the end of the month for the amount stipulated in our employee contract.

Let's just say for new, entry level positions it's $150 per month and for senior, older employees it's up to $300-$400, depending on their employee contract.

*I have no idea if the amounts we are reimbursed are fair or reasonable, but they seem generous enough.
posted by HeyAllie at 2:32 PM on January 25, 2012


You could use a pay-roll company. Many pay-roll companies offer group medical.
posted by Flood at 3:06 PM on January 25, 2012


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