Insurance costs continue to trend (or increase) at 10% to 20% per year. The combined cost of business package policies and medical insurance for employees now may constitute up to 30% of total overhead costs for a company. Senior executives and owners question how they can possibly control these costs and still maintain the integrity of their coverage. Several options are currently available; such as, partially self-insuring certain coverage and increasing deductibles. HBS helps you explore all options. We can establish long-term goals to control costs while maintaining the integrity of your plan.

Business Insurance - Because Mistakes Happen
To err is human. Business insurance protects you and your business with coverage for claims related to allegations of negligent activities or failure to use reasonable care. A business package policy offers coverage for Property, General Liability, Automobile, Workers Compensation, and Umbrella. This coverage must be renewed and reviewed annually. As insurance costs continue to increase HBS continues to offer viable options.

Employee Benefits - An Overview
While employers are struggling to deal with rising costs, they express strong support for the system of employer-based coverage. Three of five employers (59%) say it is very important to provide health insurance to their employees or contribute to the cost. Of employers who offer coverage, two-thirds (67%) say it improves employee health, and three-fifths (61%) say it improves employee morale. A large majority of employers who offer coverage feel it is important for employee recruitment.*

*Job-Based Health Insurance in the Balance: Employer Views of Coverage in the Workplace, by Sara R. Collins and colleagues at The Commonwealth Fund, is based on a nationwide sample of 453 establishments with more than one employee.

Health Coverage
The cost of health care continues to climb - trending at 15% to 30%. The message from employers is that they want to do the right thing for their employees, but are struggling to manage the rising costs of providing health coverage. Despite the belief that it is "very important" to provide or help workers pay for coverage, employers say rising premiums are forcing them to shift more costs to employees or cut back on benefits. Employers do show support for a range of policy solutions. HBS will work with you to develop a plan to help control these costs. Quality health care is manageable.

Long-Term Disability

Causes of LTD claims Cancer: 13 percent Pregnancy complications: 12 percent Back injuries: 11 percent Cardiovascular: 9 percent Depression: 5 percent Source: UnumProvident

LTD picks up where short-term disability (STD) leaves off. Once STD benefits expire (generally after three to six months), the LTD policy pays an employee’s salary, 50, 60, or 66 2/3 percent. According to the U.S. Census Bureau, there is a one in five chance of becoming disabled. A 1997 study released by the Census Bureau reveals that more than 152 million people between the ages of 21 and 64, the prime working ages for most Americans, have some form of disability. According to the American Council of Life Insurers (ACLI), a person age 35 is six times more likely to become disabled than die before he or she reaches age 65. With statistics like that, the need for long-term disability (LTD) insurance becomes perfectly clear.

Key Employee Insurance
The premature death of a key employee or business owner, who is also a key employee, can have a disastrous effect on a business. There is no easy formula for determining the value of a key employee. However, over the years, business owners have frequently used three different methods to estimate the worth of an employee to their company.

The Multiple of Compensation Method – assumes that an employee’s value is reflected accurately in his/her total compensation package.

The Contribution to Profits Method – estimates the impact a key employee has on the company’s net profit.

The Cost of Replacement Method – totals the direct, out-of-pocket costs involved in finding, hiring and training a replacement, as well as the estimated “loss of opportunity” costs.

Presently, there are three methods commonly used to finance the replacement of a key employee:

Establish an Accumulation Fund – dollars kept in a savings account represent lost business opportunities.

Borrow the Funds – assumes that the loss of a key employee does not seriously damage the firm’s credit-worthiness. Each dollar borrowed must be repaid with interest.

Life Insurance Policies – premiums are small compared to the lump sum, which would have to be quickly raised, out of earnings, or by borrowing when a death occurs. Many business owners choose life insurance to protect themselves against the loss of key employees.

Flexible Spending Accounts
This program provides tax benefits for both the employer and the employee. As a result, this has become a popular benefit to offer employees. Payroll adjusts monthly deductions for named programs including qualifying insurance premiums, health care flexible spending accounts, and dependent care spending accounts from an “after-tax” to a “pre-tax” basis.

A premium conversion account allows for the employee’s share of qualifying group insurance premiums to be automatically deducted from his/her pay with tax-free dollars.

Flexible spending accounts allow employees to pay for health care expenses, for the employee and their family, which are not covered by health insurance including dental, vision, orthodontia, co-pays, and now even over the counter drugs with tax-free dollars.

Dependent care flexible spending accounts allows employees to pay for childcare or dependent care expenses up to $5000 per year tax-free.

HIPPA
The Health Insurance Portability and Accountability Act (HIPAA) provides rights and protections for participants and beneficiaries in group health plans. It may also give you a right to purchase individual coverage if you do not have coverage available through your group health plan and have exhausted Cobra benefits.