Health insurance tracking a tiresome chore

Question: What are the obligations for businesses to provide health insurance to their workers under the state’s Prepaid Health Care Act?

Answer: Employers are required to provide health care insurance to any employee who works at least 20 hours per week for four consecutive weeks. Tracking this health care eligibility and managing employee enrollment can be incredibly cumbersome. It’s one of the most common pain-points we hear about from prospective clients.

Q: What tax credits are available to small-business owners under the recently enacted federal health care reform legislation?

A: Under the Patient Protection and Affordable Care Act, the small-business tax credit provides credits of up to 35 percent of health care premiums to employers with up to 25 employees and average annual wages of up to $50,000.

Q: What can small businesses do to control the rising cost of providing health care benefits for their employees?

A: By effectively slowing and controlling the rate of increase, employers can avoid surprises like sharp rate hikes. It’s the unplanned rate hikes that can throw off profits and stall growth. Hiring an HR administration firm is a good way to do that. Employers benefit from the buying power and leverage the firm has to lock in good rates. Our clients also benefit from the cost control that comes from well-managed plans, and this is a direct result of our underwriting program.

Q: Are there things small-business owners can do directly with their employees to bring costs down"

A: Yes, what employers can do is encourage employees to be accountable for their own health. Prevention is critical to keeping rates down. That’s why it’s a good idea to offer plans that incentivize employees to take better care of their health. It all adds up.

Q: What considerations should an employer take into account when shopping for a health care plan?

A: Because of the standard "prevailing plan" benefits that are assured via the Prepaid Health Care Act, there is not much difference in benefits. Things to consider are cost, carrier’s financial strength, reputation, customer service, claims administration, access to providers, and HMO (Kaiser) vs. PPO (HMSA, UHA, HMAA), and this will definitely differ from plan to plan.

Another consideration is how to purchase. Employers can buy direct from the insurer, which might not get them the best rates if they are a small or medium-size company, or they can buy through a broker, which doesn’t offer any control over rate hikes year to year. A third option is to work with an HR administration firm.

Q: Should an employer consult with employees before deciding on a plan?

A: If an employer is considering changing providers, yes, it’s a good idea to get feedback from employees and find out what kind of impact a change will have on them. When it comes to health care, people here in Hawaii have a lot of brand loyalty and value their existing physician network.

Q: How highly do workers value employer-sponsored health insurance among the various benefits they receive?

A: That depends on the demographic of the employee. Again because of our state’s Prepaid Health Care Act, employees expect basic health care coverage as part of their benefits. Some employees, particularly younger ones or those without families, might place a higher value on benefits like bonuses, higher wages, flex time or more vacation time.

Interviewed by Alan Yonan. "Akamai Money" seeks out local experts to answer questions about business in Hawaii. If you have an issue you would like us to tackle, please email it to business@staradvertiser.com and put "Akamai Money" in the subject line.