COACH'S CORNER
By Barry Knepper
As Seen In Queensborough - The Magazine of the Queens Chamber of Commerce

Changing Health Insurance Coverage

TAB Member's question:
We are considering changing our health insurance plan to reduce costs by shifting more burden to employees as we have found that we are paying for relatively generous benefits and want to get back to what the marketplace is offering. What are some good ideas as to how to best communicate to the employees when faced with this situation?

Tab Coach:
This is a very difficult task indeed, but employees are aware that costs are rising and health insurance costs are rising much quicker than most other costs. Be honest and open with them.  Your insurance agent should be able to work with you to compare your coverage with other area employers and explain that all of the options were studied. He can also discuss what is causing the escalation in costs, including over usage by participants.  Another suggestion is to form a committee of several employees and one of your managers.  This group should shop competing plans within a certain budget. This will allow them to explain the costs to their peers and endorse the plan they have mutually picked out as being the best.

The owner should talk about health insurance being one of the most expensive fringe benefits and how he has struggled to keep the cost to the employees down, but now competitive pressures demand that changes be made. Do not talk just about the medical benefits, but instead talk about all of the benefits combined, including: paid time off (vacations, holidays, sick leave, jury duty, etc), payroll taxes (social security, Medicare, unemployment insurance, workmen's compensation), and training. In the entire context, medical benefits are just one of the many benefits that you offer, albeit a very expensive one.

If possible, offer alternative programs so the employees can talk about it. While it may be difficult to obtain a consensus, at least you have made an offer to the employees and they will feel that they have some control over this difficult situation. It is also important to communicate the possibility of freezing or cutting back the contribution from the company for medical insurance benefits well in advance. Start discussing it at least 6-12 months prior to any changes.