With the Federal reform efforts creating a tug of war between health insurance providers and legislative requirements, employers interested in lowering the cost of healthcare premiums are going to have to do it themselves. Business owners should look to strategies such as the IRS section 125 premium only plans (POP) for an employer empowering strategy when seeking to control the cost of healthcare premiums.
Any Employer having sponsored healthcare over the last ten years is more than aware of the mounting challenges they face. Rising cost in healthcare premiums, increasing employee expectations and legislative requirements all work to deter employers endeavoring to provide their employees with affordable, accessible benefits. Anyone choosing to take a sincere look at the various rates of increase over the last ten years of premium costs and employee wages can make a fairly accurate guess as to the amount of relief they can expect in the coming decade. While its true that accommodations are most certainly being attempted in national healthcare reform, (tax credits, financial promotions, legislative requirements) many of the benefits arranged for employers are ousted by the increasing stress these legislative reforms put on health insurance providers.
The Kaiser Family Foundation conducted a survey aimed at measuring the various employer/employee related healthcare statistics. It found that, in the last ten years alone, health insurance premiums have nationally increased by 131%. The increase, according to the foundation, is in large part the result of ever weightier legislative mandates being placed on healthcare providers by the current State and Federal reform efforts. The result is an unfortunate trickling effect: More mandates create higher premiums, higher premiums place stress on employer finances, and the amount employees are required to contribute goes up while the number of employees covered by sponsored health care nationally goes down.
Employers seeking to increase the accessibility of their sponsored health care encounter another frustration; while the cost of premiums and the amount employees are required to contribute have dramatically increased, employee wages have by no means risen proportionally. Amidst the recession, employee wages have increased a mere 2% over the last year. The increase is fairly consistent with the rate of inflation but is disproportionate to the overly inflated 9% increase to the price of premiums. Premium only plans, an IRS provided money saving strategy, help to alleviate the rising inaccessibility of sponsored health care by increasing employee take home pay. POP allow employers to deduct employee contributions before taxes are withdrawn. This increases the monthly take-home pay of employees an average $100-$300 and allows a wider range of individuals to subscribe to sponsored health care.
Tools available for directly lowering the cost of health care premiums are all but nonexistent; premium only plans, however, allow employers to creatively alleviate the rising costs by increasing their annual financial gain. When employers subscribe to a POP, their annual FICA taxes are reduced by 7.65% (savings which on average accrue to several thousand dollars per year). The savings accrued through subscription to a premium only plan help to control the cost of healthcare premiums, provide greater accessibility to employees, and provide employers a money saving strategy that will help to carry them through riotous 2012 economy.
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