Practice Management

Health Insurance: What Do You & Your Employees Need?

By Diane Palombi, OD

July 8, 2020

Determining the health coverage you need, and what you can (or cannot) afford to provide for your employees, has always been a hard question. The COVID-19 health crisis has made that question more pressing than ever.

My husband and I have been wading through the thorny question of health coverage in recent years, and I have gotten feedback from younger ODs that it is no easier for them. The generous health insurance coverage I got years ago through my membership in the American Optometric Association is no longer available.

What Portion of Health Costs (if any) Can You Afford to Cover?
Very few business owners can afford to cover the expense of their employees’ insurance 100 percent. When I was an optometrist working for LensCrafters, I paid a portion of my health insurance. I also had my family covered and had money taken out of each paycheck for their coverage, too.

When I became the owner of a private practice, I was covered by my husband’s insurance. I never felt the need to offer health insurance to my employees because they were employed only on a part-time basis. Most received coverage through a spouse, so I usually did not hear complaints about them not having health insurance through their job.

How Generous a Plan Do You Want to Offer?
My husband’s company provides health insurance to his employees. He is extremely generous. The employees pay nothing for their insurance. However, they have to pay for spouses and dependents at the going rate.

Over the years insurance premiums have skyrocketed. Annual increases of 18 percent, or more, have been common since the year 2000. My husband and I ended up dropping his company-provided insurance and going with the health insurance which the American Optometric Association provided at the time.

The AOA was a larger group, so I got an extremely good initial rate for the essentially the same coverage that we had with my husband’s company insurance. My insurance premium has more than doubled over the last six years, but it is still affordable. If we were on my husband’s health insurance at the present time, we would be paying $2,300 more a month than we did with my insurance. This would be a large hit to our income.

Managing Insurance When a Spouse is Eligible for Medicare
My husband is now eligible for Medicare. We would have liked to have had him stay on my insurance, but that was not an option in our state of Missouri, my insurance company informed me. Since my husband still works, he is hit with paying an income-related monthly adjustment amount (IRMAA) for his Medicare and prescription drugs. So, now that he is on Medicare, he pays around $300 more a month than when he was covered by my insurance.

In addition, he still has Medicare taxes taken out of his paychecks. The only way to get ahead is for him to stop working. Medicare is not capped like Social Security is with payroll taxes. So, high wage earners pay more into the system. When it is time to collect, they are then hit with IRMAA.

I was lucky that I could have my health insurance “grandfathered” in, as Missouri is a non-ACA conforming state.

Insurance Challenges May Be Steeper for Younger ODs
The AOA no longer offers health insurance. Younger optometrists complain about the limited options available for them.

My self-employed friends tell me that they pay huge premiums for essentially catastrophic health insurance. Their deductible are tens of thousands of dollars. It just keeps them from going to the poor house if they get a major illness or have an accident.

Is the Solution Going Back to All Out-of-Pocket Payments?
When I started with Lenscrafters in the mid-1980s, patients were paying for their glasses out of pocket. We took no insurance plans. It did not seem to be a problem either. Patients did not complain about it.

The first insurance plan that we took was Eyemed after U.S. Shoe sold out to Luxottica. By the time that I opened my private practice in 2000, I was seeing almost entirely patients covered by vision plans and medical insurance. Many patients liked to stay within their insurance budget and did not spring for non-covered options. It seemed liked vision plans changed people’s mindset about spending their own money on glasses and contact lenses.

Perhaps instead of business size, employee age and gender and utilization dictating insurance rates, another method can be found. A small business that has one chronically sick employee can have their rates skyrocketed versus a large company that can absorb one ill employee better. It is such a numbers game. Small companies can be eligible for tax credits for insurance premiums, but that is only if the employee wages fall under a certain threshold. Is there a better way?

What have you experienced in the struggle to provide health insurance for yourself and your employees? What changes do you think would make paying for healthcare easier for most people and businesses?

 

Diane Palombi, OD, retired now, is the former owner of Palombi Vision Center in Wentzville, Mo. To contact her: dlpod1@hotmail.com

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