New products help employers offer benefits

Due to the downturn of the economy in recent years employers have had to look at drastically changing employee benefits packages to preserve jobs and even prevent possible business closure. The "same old-same old" will no longer work in these current times.

As the economy has continued downward, insurance companies have developed new products to help employers continue to offer benefits to existing and potential new employees.

Most employers are working with their current insurance agent (broker) or should be working with a broker to put together and develop new innovative ways to keep the coverage rich in benefits, even while they keep a close attention on the bottom line.

Some nontraditional options can enhance major medical insurance without harming the bottom line.

Limited medical plans, gap plans, and voluntary benefits offer a viable low-cost alternative, sometimes at no cost to the employer.

Limited-medical plans are a scaled-down plan. It's imperative to connect with a broker who will give you a professional review of the insurance contract and plan document provided by each limited-medical insurance carrier.

Many types of employers offer a limited-medical plan so that they are not forced to take away traditional health care. Some offer them to employees who face a six-month or a one-year waiting period. Others offer them to part-time employees. They also are used by employers who want to offer some coverage companies such as fast food establishments and restaurants, bars, casinos, retail stores, real estate offices, staffing companies, construction companies or landscaping companies.

Among the benefits that can be offered in a limited-medical plan are coverage of visits to doctors' offices, prescriptions, wellness and preventive care, emergency room treatment, diagnostic testing and X-rays, hospitalization, surgery, treatment of mental illness or substance abuse and skilled nursing. Some plans also include life insurance.

It is very important to make sure you have a network implemented with your limited-medical plan. It is important to choose your limited-medical plan network wisely, as you may find that there is no coverage in a specific area or region. Or you may discover that the plan provides very small discounts.

Gap plans, another option, are a multi-billion dollar industry and one of the fastest growing segments of the health insurance industry.

Gap plans designs may be used as supplemental (gap) coverage, providing another layer of insurance. Gap plans work well to increase your deductible, in some cases as increasing it as high as $5,000 to $10,000 per year.

The addition of a gap plan can reduce the cost to an employer's bottom line, and some employers can save thousands of dollars without terminating the group insurance plans.

Unlike comprehensive major medical insurance, many gap-plan designs do not base their benefits on actual charges incurred. Instead, they pay on a fixed-benefit indemnity amount when various health care services are utilized. There are also some expense-incurred "copy" plans that do pay based on actual expenses incurred and do not pay based on indemnity benefits.

Gap plan commonly provide for assignment of benefits. This allows for a variety of approaches. In some, the provider bills the insurance company directly. In others, members are required to pay medical bills upfront, then they fill out a claim form to request their benefit.

Gap plans also range widely in their levels of coverage, both in types of coverage and monetary amounts.

Voluntary products, also known as worksite products, are positioned to fill the void for employers who want to provide a comprehensive insurance program to employees, but cannot justify the cost of the entire program.

In these situations, the employer can offer employees voluntary, payroll-deducted coverages at competitive rates. Voluntary products include life, short-term disability, long-term disability, critical illness, cancer, heart/stroke, limited medical, legal and ID protection, homeowners and renters insurance, pet insurance, life insurance, and many other options.

Connecting to the correct broker for these types of plans is essential. Many insurance companies offer this type of insurance, some that only write voluntary benefits, and many other currently getting into the marketplace. A good voluntary plan that works well to complement health insurance is a must. These types of plans can be written on a guaranteed issue basis (no health questions). Depending on the product, industry, and number of employees, this can protect the employer's bottom line.

A cafeteria plan (a premium-only plan and a Flexible Spending Account) is designed to allow some qualified expenses to be paid from pre-tax dollars. Expenses paid through these plans are not subject to federal, state, or Social Security taxes, thus saving the employee and the employer money.

Flexible Spending Accounts allow employees to set aside a pre-established amount of money for the plan year, and pay these expenses with pre-tax dollars. The employer's tax savings usually will offset any costs associated with offering the plan.

Steve Dalinis is president of JD Benefit Services Inc., a Reno company that specializes in employee benefits. Contact him at (775) 337-1175 or through steve@jdbenefit.com.