Personal Finance

It was the first evening of the RLCI Summer Conference in Bay City Michigan. As I sat with a group of younger ministers, one of them asked a great question. “What should I be doing with my investments?” I gave them all the best advice I could muster and finished by adding “but I am no expert.” Much to my surprise, the next morning’s newspaper had an article entitled “What should you do about investments?” Click here to read the article by John Waggoner in the July 16, 2008 edition of USA Today.

The Health Care Conundrum — Part II

What do all these letters mean?

By Matt Haverdink

Following last week’s article on controlling health care costs, I thought I would offer some more information on the different products that are available to employers who provide health insurance to their employees. The most popular options today, that I see, are HRAs (health reimbursement arrangements), FSAs (flexible spending accounts) and HSAs (health savings accounts). It would be very difficult to explain in one article all the differences between the three options. I will say my experience, similar to Priority Health’s, is that FSAs and HRAs outpace HSAs by a large margin.

In theory, the HSA puts the consumer in control. The idea is that if an employee is spending their dollars then they will try to be more proactive in the cost and type of care they receive. I have not heard any convincing statistics that employees are changing their buying habits because of the HSA. What you don’t want is an employee not getting care in order to save money or because they don’t have the money in their High Deductible Health Plan, which is required for an HSA. Also, with an HSA employees lose the much coveted prescription card. Prescriptions are subject to the high deductible before the insurance pays anything.

On the other hand HSAs do seem to be a good fit for the smaller employer or for the young and healthy.

HRAs put the employer in control and they don’t require immediate funding. An HRA is designed to reimburse the employees if in fact they incur a deductible related expense. Like an HSA, HRAs have a high deductible. However, the employer is usually doing an HRA so they can reduce premiums and self insure a portion of the deductible. If the employees are healthy and have few claims then the employer saves more. Res Life of Grandville has experienced a tremendous amount of savings with the HRA concept.

FSAs (Flex accounts) can be offered along with an HRA or on a very limited basis with an HSA. FSAs allow employees to defer a portion of their wages on a pre-tax basis. These monies can then be used to pay for uncovered medical related items such as copays, deductible, co-insurance, dental, vision, over the counter drugs, orthodontics, etc. Many employees find FSAs valuable because of the preferential tax treatment.

I am including a couple links in which you can get some additional information and questions answered. If you have further questions, do not hesitate to call me or your current agent.

http://www.hsa223.com/plandesign.asp

http://www.priorityhealth.com/pdfs/healthplanspdfs/hsahracomparison

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Matt Haverdink has been providing employee benefits for 17 years and is a certified Senior Professional in Human Resources. Matt is also the co-owner of Ottawa Kent Insurance and co-founder of HealthTrack. HealthTrack is a corporate wellness provider in West Michigan of which local companies are offering their employees as a prevention tool to combat rising healthcare costs. Questions can be directed to matth@okins.com or (616) 392-6006.

The Health Care Conundrum — Part I

By Matt Haverdink

The ever daunting task of helping employers find ways to control healthcare costs and keep benefits strong and affordable is not an easy one. Fortunately, the small employer can do something other than the “do nothing” strategy.

We, as a community or employer group, pay for our claims one way or another. I’m here to tell you the doctors, hospitals, pharmacies and insurance companies are NOT losing money. We’ve all seen the tremendous expansion in Grand Rapids and the surrounding areas. Who is paying for that? The cost is being passed on to employers and employees.

I have yet to find someone to disagree with the theory of – healthy employees cost less than those who are sickly. Sure some illnesses can’t be avoided, but the Center for Disease Control states 70% of our healthcare costs are controllable. By that I mean, nutrition, exercise, weight control, smoking etc. The obesity rate in Michigan (27.7% in ’07) is increasing at a very rapid rate. Long ago are the days when kids spent the entire day playing ball and being outside. It is a different society with the computer and video game options available.

My experience with several of my clients as well as our own experience is worth mentioning. For our agency we have been able to keep our health care cost increases to a minimum. In fact our rates for a no deductible plan are slightly lower than what they were 4 years ago and we haven’t had to increase our employee portion of the premium or reduce benefits. Unfortunately, most employers have had to simply cost shift by raising deductibles and premiums to the employees or absorb the costs themselves-sound familiar.

When you design your plan you can afford to take more risk if you have a healthy group. Why pay for low deductibles if you are healthy? Insurance was designed to cover that which you can not afford to pay yourself. A well designed plan would take into consideration the makeup of your group, i.e. claims, utilization, age and family status.

ResLife of Grandville has experienced a huge cost savings over the past 2+ years by encouraging healthy lifestyles and designing their health plan so that their better than average claims experience rewards them and not the insurance company.

Talk to your agent to make sure that you have analyzed the different options available
(HRA, HSA, FSA). How is your premium determined (community or experience rated)? These are questions you should ask to make sure you are aggressively doing everything you can do to control healthcare costs.

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Matt Haverdink has been providing employee benefits for 17 years and is a certified Senior Professional in Human Resources. Matt is also the co-owner of Ottawa Kent Insurance and co-founder of HealthTrack. HealthTrack is a corporate wellness provider in West Michigan of which local companies are offering their employees as a prevention tool to combat rising healthcare costs. Questions can be directed to matth@okins.com or (616) 392-6006.