[HR Issues] Necessary Evil?

Health insurance is expensive, and rising premiums continue to pinch the pest control industry’s bottom line. Yet, healthy employees are productive ones, and pest management professionals know offering health benefits can help attract and retain quality personnel.

Finding ways to protect employees while managing rising costs is a challenge, agree pest management professionals. Craig Thomas, Craig Thomas Pest Control, Hyde Park, N.Y., says health insurance costs are up more than 19 percent from last year, although some of the increase is from adding staff. His plan covers individual employees, who in turn cover the difference to enroll their family.

"The cost of health insurance is draining me dry," says All-Ways Termite & Pest Control President Tracy Hamlin, Enterprise, Fla. He splits premiums 50-50 with employees, half of whom have opted to enroll in the company-sponsored PPO. "It’s not cheap, but it’s better than not having health care."

Premiums increased an average of 9.2 percent in 2005, more than three times the growth in workers’ earnings (2.7 percent) and two-and-a-half times the rate of inflation (3.5 percent), according to the Kaiser Family Foundation 2005 Employee Health Benefits Survey. Since 2000, premiums have gone up 73 percent. Not surprisingly, 73 percent of business — the majority being small firms — cite cost as the key reason for not offering health benefits to their workers, the survey found.

QUALITY OF LIFE ISSUES. Despite the high costs, pest management professionals recognize the value health benefits have in attracting quality employees. "Fifty percent of my decision to offer health care was to attract good employees," says Hamlin.

"It’s definitely a recruiting tool," adds Human Resources Manager Edith Alson, Western Exterminator Co., Anaheim, who’s spent 17 years managing the company’s health care. Western, which has about 1,000 employees in California, Arizona and Nevada, offers both HMO and PPO plan options. The HMO plan is more popular, as well as less expensive for employer and employee due to inherent cost containment measures, she says.

Benefits are attractive to potential team members, agrees Massey Services Benefits Manager Grace Byrd, Maitland, Fla. Massey offers an open access HMO that doesn’t require referrals if in-network and a PPO to employees in Georgia and Louisiana. In Florida, the company covers 73 percent of an individual or family premium, as well as reimburses up to $1,500 toward a major medical deductible.

Premiums keep going up because claims keep going up, Alson explains. Western offsets premium increases by covering 50 percent, and passing on the other half to employees. So far, Thomas has covered premium increases in full, but makes it a point to communicate this "hidden" benefit to employees. Massey Services has not increased employee premium costs in seven years, says Byrd. Rigorous yearly and monthly employee training programs help keep increases to a minimum — only 5 percent in 2005.

KEEPING COSTS DOWN. But many employees are feeling the rub. Between 1998 and 2003, three million fewer workers who are eligible for health benefits elected to enroll in their employers’ health insurance plan, found the Robert Wood Johnson Foundation. Alson and Byrd haven’t seen this trend, although there always are employees who shift to spouses’ plans.

More than half of all adults without health insurance say the high cost of coverage is the reason they’re uninsured, the foundation says. The American Medical Association, on the other hand, advocates "individual responsibility," recently backing a tax penalty for those who make enough money to buy medical coverage but choose not to do so.

What steps can pest management professionals take to cap costs and help employees become better health-care consumers? Education, says Byrd. "Help people understand how their plan works." Byrd conducts yearly meetings at 22 Massey offices, encourages an open-phone policy with team members’ spouses, and holds monthly and new employee information sessions. "The more you educate your people, the better the decisions they make" about health care. And, the more money they’ll save themselves and the company.

Alson suggests using a broker to negotiate the best rates with insurance carriers. To find a good one, seek referrals from similar companies, and find one that handles all your insurance needs: liability and health care. Combining coverages may help you negotiate a better deal.

Size matters, too. Larger employers have greater negotiating power; smaller firms do not, unless they go in as part of a group, says Alson.

Wellness programs encourage employees to actively participate in their health future, offering guidance on diet/nutrition, fitness, smoking cessation, control of asthma, high blood pressure, diabetes and a host of other health issues, and sometimes even financial and legal counseling.

Flexible Saving Accounts (FSAs) let employees to use pre-tax dollars toward out-of-pocket health-related expenses not normally covered by insurance, such as copays and deductibles, eyeglasses and orthodontic braces. The savings to employees can be considerable, Alson says. Massey’s FSA has been hugely popular, adds Byrd.

Health Savings Accounts (HSAs) supplement high deductible health plans by letting employees save pre-tax dollars for medical expenses, but "use it or lose it" rules don’t apply, employer contributions are allowed and funds can grow through investment earnings like individual retirement accounts.

Yet for many employers, health benefits are just not an option. The Kaiser Family Foundation found 60 percent of firms offered coverage to workers in 2005, down from 69 percent in 2000, with small businesses leading the drop. More than 41 million U.S. residents — 14.2 percent, of the population — had no health insurance in 2005 at a specific point in time, according to the National Center for Health Statistics.

The author is a contributing writer to PCT magazine and can be reached at via e-mail at anagro@giemedia.com.

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Industry Seeks Alternatives to Reduce Health Insurance Costs

hough it’s not a new challenge, the continual increase in the cost of health insurance has companies seeking alternatives — in providers, plans and coverage, and research groups funding surveys and studies across the United States.

According to the Milliman Medical Index, a study conducted by global consulting and actuarial firm, Milliman, medical spending in 2006 for a "typical" American family of four will average $13,382. The study, based on coverage under an employer-sponsored Preferred Provider Organization (PPO), found that:

• The average "typical" family’s annual medical cost increased by 9.6 percent since 2005, with an average annual increase since 2002 of 9.7 percent.

• Member cost sharing estimates the family will pay $2,210 in out-of-pocket expenses through the year.

Monarch Pest Control, Minneapolis, Minn., which was facing a significant monthly increase on it health insurance plan, recently changed insurance companies and increased its use of medical savings accounts, one of a number of the newer Consumer-Driven Health Plan (CDHP) options available.

In fact, such CDHPs — primarily health savings accounts and health reimbursement arrangements — are gaining in popularity among employers, according to a study of 434 nationwide employers, conducted by Aon Consulting and the International Society of Certified Employee Benefit Specialists (ISCEBS). The study found that:

• 28 percent of the companies surveyed offer a CDHP — up from 22 percent in 2005.

• Of those offering the CDHP, 75 percent began their programs this year or last.

• Of those without CDHP programs, 40 percent are planning to offer one in the future.

A Texas-focused study by Opinion Research Corp. and sponsored by The Guardian Life Insurance Company of America (Guardian) and Destiny Health Healthcare found that 82 percent of its respondents believed benefits are extremely or very important to recruiting and retaining employees. But because a majority of these employers also report an average 14.7 percent increase in health-care costs over 2005, they are coping with costs by:

• Cutting expenses in other areas of the business.

• Increasing employee co-pays and deductibles.

• Switching health-care insurance providers.

• Trimming benefits, while bearing the brunt of health-care
costs.

In fact, Frank Merryman, owner, Abby Protex Pest Control, Houston, Texas, posted a few tips of his own on the PCT online message board (www.pctonline.com/messageboard) about reducing insurance costs:

• Although health insurance companies give reasonable rates the first year, "within a year or two they start jumping — often pretty big increases." If you’re healthy, he says, shop around for a lower rate; if you’ve developed a medical condition, you probably won’t get a real low rate, but you should still shop around.

• Because most employees are aware of the ever-increasing cost for health insurance, they generally won’t be surprised if they are asked to kick in on coverage. "You could say you’ll pay a percent you can afford like 50 percent or 75 percent. Or you could offer to pay up to a flat amount per month per employee — say $150 and the employee pays any overage," he advises.

Though the message-board thread goes on for 30 entries, Merryman’s final words provide an appropriate end to the online discussion. Following another PCO’s entry that, "Happy employees often equate to happy customers," Merryman writes: "Happy spouses/special friends equate to happy employers which equate to happy employees which equate to happy clients which equate to a happy economy which equates to world peace and justice for all. Well...sorta... maybe." — Lisa Lupo