Tracking the Elusive Health Insurance Plan

“It’s extremely important to have a solid health insurance plan,” says Jack L. Huddleston, Director of Administration at Thomas Horstemeyer and member of the Atlanta Chapter. “Without one, I don’t think a firm can be competitive in today’s market.” 

If health insurance is mandatory, landing the right policy can be frustrating. “It seems to be getting more difficult to find good quality, economical health insurance,” says Corry Johnson, Benefits Consultant and Retirement Specialist, GLJ Financial, an ALA VIP Business Partner. He’s helped law firms do just that for two decades.

“One problem is the consolidation of health carriers, so there aren't as many options as there used to be. A second one is demographics since the population is aging.”

Larger firms have advantages in the process, notes Johnson. First, they can look into self-funded or partially funded plans. Second, they have more leverage with carriers, playing with the benefits mix to make targeted adjustments.

Even the larger firms, though, can encounter unexpected roadblocks if they operate in more than one state. “Carriers tend to treat each office as a separate group,” says Johnson. “So if a firm has 20 employees in Arizona, 20 in California and 20 in Colorado, the firm loses the flexibility it would otherwise enjoy as a larger group.”

As those comments suggest, smaller firms face greater hurdles. Self-funding is pretty much off the table, since the risks can outweigh the benefits for organizations with limited employee pools. And their smaller sizes offer little motivation for carriers to provide anything beyond canned policies. “Especially for firms with fewer than 50 people, there’s not a lot of wiggle room in terms of rates and benefits,” says Johnson. 

Firms lacking sufficient market clout must spend more time and effort dealing with brokers. 

“One challenge for smaller firms is the discrepancy that commonly exists between lower-paid and highly compensated employees,” says Lori Dodge, SHRM-CP, CPP, Accounting Manager at Ross Scalise, a firm with six attorneys and six staff members. Individuals with highly varied incomes will have different expectations regarding premiums and benefits, requiring the firm to offer more than one policy.

Flexibility and creativity can go a long way toward finding just the right selection of policies. At Ross Scalise, premiums under a plan with United Healthcare had risen to $850 a person per month in 2018. In response, the firm switched to Blue Cross Blue Shield, where the premiums were $530 a month. The firm restructured the employer-employee portions from a straight percentage of the premium to a sliding scale percentage based on the plan the employee chose. 

“Our firm offers five policies to provide 100% coverage for all of our staff,” says Dodge, a member of the Austin Chapter. All the employees who make less than $18 an hour are on an HMO; one employee is on a health care savings account (HSA); one paralegal is on a base PPO and all of the attorneys are on silver and platinum PPOs. 

Putting together such an array of plans demands a lot of time and effort, especially for a smaller firm where the staff is already overworked. The job can be made easier, says Dodge, by asking employees what they most value before investing time in policy shopping. “What is really important to our people is the 100% copay and a deductible that matches the maximum out of pocket. After they spend the deductibles, they're not spending anything else.”

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• Telemedicine: Getting health services over the phone is gaining in popularity. Many plans are now bundling it in as an additional feature. And they can pay it off even if not covered by insurance. “One thing to consider is using programs such as Teladoc,” says Johnson. “They do carry an additional cost because they stand alone from the health insurance plan, but their services don’t count against your claims and your loss ratios. That can keep your renewals down going forward.”
  
• Wellness programs: “Try to use wellness fairs, immunizations and weight loss and smoking cessation programs,” adds Johnson. “They can all have [a] long term very positive effect on your rates. The idea is to try to catch your smaller claims early before they become large ones.”
  
• Level-funded plans: “These are very similar to partially self-funded plans, and have similar stop losses,” says Johnson. Employers pay set premiums to a Third-Party Administrator (TPA) to cover claims and administrative expenses. “Unlike self-funded plans, they are typically run by fully insured carriers. The benefit is that if a firm’s loss ratios fall below a certain percentage it receives a credit back for funds paid in as premiums.”

Law firms say the right broker can help navigate the choppy health insurance waters. “It’s important to have a broker you trust and can talk with,” says Huddleston. “Our broker is our expert. He helps on renewing and assessing plans, getting quotes and resolving any issues very quickly.” For example, when an employee was billed recently for an unnecessary hospital procedure, the broker helped get the charge reversed. Most of the 70 people at the firm take advantage of the offered health insurance plan.

The necessity of a good broker is seconded by Dodge. “Some brokers I've dealt with just don’t seem to care much and offer little guidance. Many brokers don’t want to work with a firm with fewer than 25 employees. Our current broker is [from] Foundation Benefits. He is trustworthy and works to fit the needs of our firm, even at the expense of a sale.”

The right broker can also help with one of the biggest challenges for law firms in the benefits area: ensuring that health insurance costs don’t break the bank. “The biggest challenge for most law firms today is providing enough salary and benefits to attract top talent, while considering the effect on profitability,” says Huddleston. “There’s no one solution for all situations. It becomes a fine, fine balancing act.”

Most people rely on Social Security for at least some of their well-being after retirement. But what if the Federal program isn’t around? There’s been a lot of publicity lately, including a recent Financial Times column, about solvency issues.

Law firms might want to help fill the gap with their own programs to help employees who have completed their working careers. “While there’s no magic bullet, I think more firms should consider doing more with their 401(K) and other retirement plans,” says Johnson. “Many firms already have profit sharing contributions. They might also consider a cash balance plan, which allows participants to put more money in. Many firms are familiar with these plans but have not yet taken a lot of time to look at them.”

There is evidence that law firms are stepping up to the plate with retirement plans of their own. At Atlanta-based Thomas Horstemeyer, employees are eligible after 30 days for the 401(K) plan that has a 4% profit sharing component. And at Ross Scalise, 100% of the employees are enrolled in a 4% match safe-harbored 401(k) plan. “I stress to all of our employees how important it is for them to be enrolled,” says Dodge.