It is safe to say that designers do not start their firms out of a desire to spend more time thinking about health care packages for their employees. But in any competitive industry, retaining a talented, productive workforce means offering not only meaningful work and adequate compensation but benefits like insurance that can keep your staff and their families healthy.
“It’s just a given, I think, for an architecture firm,” says Jon Styner, AIA, a partner with Portland, Ore. firm Waterleaf Architecture. “[Providing insurance] is about attracting talent, but we also just feel it’s what you’re supposed to do.”
Under current law (The Affordable Care Act), only companies with 50 or more employees are required to provide health insurance. “But in the construction and design community,” says Jon Niedermeyer, CEO of Portland, Ore.–based insurance provider Niedermeyer Risk Management, “It’s so competitive that architecture firms tend to have richer benefits than most white-collar businesses.”
So we asked some business advisers and healthcare providers to weigh in on what options you should consider when selecting a plan:
Cost and Coverage
Choosing the right plan starts with assessing employer and employee contributions. “The cost of a plan is the first question,” says Joe Langel, an account executive for Holmes Murphy & Associates, a Des Moines, Iowa–based independent insurance brokerage that often works with architecture firms. The age of your staff will be crucial in determining cost: the younger they are, the more affordable the premium will be. “The Affordable Care Act took away the ability to underwrite other factors,” Langel says. “It’s a rate based on your age and region.”
From there, it’s a matter of finding the right balance for deductibles and employee contributions. A company shouldn’t spend to a degree it can’t afford, but lower rates are not always what matter most. “You get what you pay for,” says Stephen Lapp, a Waterleaf partner. “One year, we elected to save some money by going with another dental insurer, which caused several people in the office spending time trying to substantiate a claim that was denied. We said, ‘It’s not worth it.’ It’s not worth our staff being disgruntled and on the phone settling claims.”
In some parts of the country, firms with fewer than 50 employees can get a better rate by joining together in a group plan—as Waterleaf has done for the past 15 years, first as part of a group plan for architecture firms in association with an Oregon chapter of the AIA and then, after their plan went up by 20 percent last year, as part of a community-care plan for businesses in the city’s metro area. “For a smaller practice like ours, if you can be part of a greater pool, you get a lower rate,” Lapp says.
Self-Funding vs. Fully Ensured
Employers must also decide how to pay for healthcare for their staff. A firm can opt to be fully insured, meaning they purchase a policy from an insurance provider for a fixed premium to manage employee claims. In this case, the annual cost may change upon renewal, but the insurance company incurs the financial risk of claims exceeding projections.
Alternatively, an employer can opt to self-fund its employee claims. In this case, “you, as the employer, pay the claim, and you buy insurance to protect yourself from catastrophic stuff,” says Jeff Clayton, another account executive at Holmes Murphy. “If employees do not need a lot of access to doctors and hospitals, you’ll actually pay less,” he says. “It might make sense if you have a young, healthy workforce.”
Niedermeyer says that firms with fewer than 50 employees usually opt for the fully ensured coverage because "they don’t have the [staff] volume to justify self-funding. Self-funding is a market that’s best for firms that have 100 or more employees.”
Options for Employees
Next is the question of what type of plans to offer, such as a Health Maintenance Organization (HMO) or a Preferred Provider Organization (PPO). The major difference between HMOs and PPOs is that an HMO offers access to certain doctors and hospitals within its network while a PPO offers more flexibility in picking a doctor or hospital. Waterleaf chose a PPO precisely for its flexibility. “We liked the fact that staff had the ability to select their provider,” Lapp says, “versus an HMO where you may have a more limited select pool of providers.”
In some cases, selecting the right plan can be dictated by geography. "The PPO is the bigger network, so that would be better for rural areas," says Langel. "If you’re in a rural area, PPO might be better because there are more doctors."
There are also Health Savings Accounts (HSAs) to consider, in which employees with high-deductible health plans are awarded funds—that not subject to federal income tax at the time of deposit to an account—by an employer to be used for qualified medical expenses. “They’re very popular with younger workers and people who don’t have ongoing health conditions,” Clayton says.
In the end, options seem limitless, but in prioritizing the needs of a particular staff, small firms can select coverage that helps the individual and the design company.