Choosing business health insurance

When companies look for a health plan to offer as part of their employees' benefit package, they go shopping.

Human resources offices in small companies shop around for the best coverage and accept the lowest and best bid from the insurance companies who submit them.

Large companies, like Rubbermaid that has a plant in Jackson, don't require their individual locations to shop around to get health insurance. Joe Marotti, Rubbermaid's vice president of human resources in Fair Lawn, Ohio, said Rubbermaid owns 26 companies and has offices worldwide. All have the same health insurance provider. That kind of volume leverages the premium cost, he said.

Erin Pfeifer of Rhodes 101's human resources department said that company, like other small businesses, goes through a brokerage company which collects census data from the company and goes to market through a broker.

"They go to places like Mutual of Omaha, Epic, Blue Cross/Blue Shield and get pricing," Pfeifer said. "Then they come back to us."

Large companies with a nation-wide population have an advantage similar to buying in bulk; they can get lower rates. Smaller companies like Rhodes 101, Pfeifer said, depend on the broker to negotiate for it.

Among the variables that determine the premium cost is the overall health of the company's population, she said. An ideal situation would be a workforce of relatively young employees with good general health -- no smokers, people who exercise, employees diligent about getting flu shots. Because they would make fewer claims, the company would pay less in premiums for them. But most companies have a few employees who are not so healthy.

"There's always going to be a mix," Pfeifer said. "People can't help getting the flu or having an accident. That's what insurance is for."

Some companies opt to self-insure.

"We self-insure up to a certain point," Pfeifer said. "A lot of companies do that but there is some risk involved."

Self-insuring companies keep money in an account for insurance claims. One or two employees who develop a serious illness or has an accident could easily wipe out the company's insurance fund. When an employee reaches expenses at an established amount, then a third-party insurer, known as a re-insurer, takes over.

"For the most part we're self-insured," Marotti said. "Our provider administers the plan for us."

Marotti said he does not know the maximum Rubbermaid pays before the reinsurer takes over.

Pfeifer says the best way to keep insurance costs down is for employees to educate their personnel. Companies that offer smoking cessation incentives and offer discounts for health club memberships can cut healthcare costs when their employees take advantage of them.

Other forms of education, Pfeifer said, include offering mail order prescription plans so employees can buy their medications in larger quantities, which tends to be less costly than visiting a pharmacy. Perhaps the most effective way of educating employees, she said, is to make sure they know the difference between going to the emergency room and going to an immediate healthcare clinic or family doctor when they are ill. It's also less expensive for both the employee and the employer if the employee does not go to the emergency room for treatment of an illness that could be taken care of in a doctor's office.

"It's good to know how important it is to have a family physician," Pfeifer said. "Thirty percent of all people don't have a family physician. You need someone who knows your history and can help you."

Marotti of Rubbermaid said the corporation is able to buy excellent health benefits, and is "big on wellness."

"We have screenings on the premises in most areas," he said. "We offer free physicals for employees every year -- all but bargaining-unit employees, and that's covered in their contract."