How can I reduce health insurance costs?

Q: I currently offer health insurance to my employees, but I am thinking of dropping it because the cost has increased so much. However, I'm afraid that not offering coverage will make it harder for me to attract employees. Are there ways to reduce the cost?

A: Health insurance costs have indeed risen dramatically in recent years, and the industry is predicting additional increases.

But with record low unemployment in Michigan, you need to offer an attractive benefits package to obtain quality help. The Michigan Retailers Association's recent benchmark survey on retail wages, salaries and benefits reveals that more than two-thirds of retail workers receive health insurance coverage, so you may be at a competitive disadvantage if you fail to offer it. (The percentage of workers with coverage ranges from 54 percent for retail clerks to 69 percent for store managers and buyers.)

One possibility you may not have considered is having your employees pay a portion of the premium. Although MRA's survey shows that most retailers who offer employee health and dental coverage pay 100 percent of the premiums, that is not the only way to provide a valuable benefit. Having employees pay a portion of the cost will still save them money over trying to purchase insurance on their own, but will significantly reduce your expenses.

You may also want to adjust the insurance plan to make coverage less costly. Since prescription drug prices have fueled a large percentage of the rate hikes, raising the prescription drug copay is one easy way to cut premiums.

MRA's retail compensation survey provides additional data that can help you develop a competitive pay and benefits package. To order the full report, contact Retha Lachance at 800.366.3699 or rlachance@retailers.com.