For most New Jersey small businesses, health insurance can be one of the largest expenses they incur, second to employee payroll. It is also the one expense that seems to go up every year, without fault of the employer or its employees. Because of this, the most common question I get is, how can we get the price down?

Top Five Ways New Jersey Businesses Can Lower Their Medical Insurance Premiums

1. The first and easy answer is to shop around. This one is obvious, but make sure your broker quotes your insurance coverage with all of the major carriers. Insurance carriers will take a snapshot of your group about 60-90 days before your renewal, and base renewal rates on those demographics. If your census changes during that time period, you may find a much better deal by moving the coverage. As an example, a 64 year old employee turns 65 one month before the renewal and comes off the plan at renewal. Your current carrier won’t re-rate your group but another carrier may end up being 10% cheaper.
2. Network considerations – In NJ, most of the carriers sell a managed care network and some sort of PPO network or national network. Decide if you really need the national coverage and maybe consider the managed care(HMO network). In most cases the smaller network really isn’t small at all and you will have access to all the same doctors and hospitals as before. Savings can be anywhere from at least 4% to probably 20%. If you are eliminating out of network coverage, the savings are closer to the 20%. Keep in mind that emergencies are covered regardless of the network so that should not be a concern.
3. Deductibles and co-pays – This is usually one of first options for getting the cost down. Raise the deductible and raise the co-pays. Many times you can add a $1,000 deductible and have premium savings well over $1,000. A $2500 deductible may save you $3,000. The reason for this is that the insurance companies know that for every increase in deductible, there will be less claims.
4. Health Reimbursement Accounts – To piggyback on option 3, I think every small business should at least consider a health reimbursement acccount(HRA). Your business will purchase a very high deductible plan and than use the premium savings to reimburse employees for their services. Premium savings can be 50% or more and after reimbursing employees, your savings can still be up to 30% over your current rates. The HRA funds are tax deductible to the business and tax free to employees. *** Extra plan documents need to be created a third party administrator should be used.
5. Health Savings Accounts(HSA)- Along the same lines as the HRA, your business will purchase a high deductible, HSA plan, and see premium savings up to 50% in some cases. You have the option of funding each employees account and the employee may use the funds for anything they see fit. If it is for a qualified medical expense, like prescriptions, dental work etc… the money will come out tax free for the employee.

If you are a New Jersey small business and your insurance premiums have gone out of control, I guarantee you will see cost savings by using the techniques above. We have seen employers with 10 employees save over $30,000 with options 4 and 5.

Please contact me here for your New Jersey Small Business Health Insurance. Contact  – NJ Health Insurance Quote