To offer health-insurance plans that are cost-effective, but at the same time appeal to employees, many PR agencies look to brokers, while others give staff more say on options.Health-insurance costs are a bit like the weather - they affect everyone, but they seem out of anyone's control. Major PR agencies owned by holding companies rely on their parent companies to assemble their health-benefits packages. For independent agencies, however, health-insurance costs are a major expense. At Sterling Communications, a 30-person shop in Los Gatos, CA, health-insurance costs have skyrocketed 300% from 1999 to 2004. Health insurance is now the agency's third largest expense after salaries and rent, says Kirsten Lundstrom, VP of operations and human resources at Sterling. Finding the cheapest insurance alternative - while simultaneously providing benefits that appeal to potential employees and retain current staffers - is a major challenge. Those who've done it advise finding a trustworthy insurance broker who can bring you bids from a variety of insurers and serve as a resource when problems arise. They also suggest considering a variety of coverage options and combinations of various deductibles and other alternatives to hold down costs. Jonathan Jaffe, founder of Jaffe Communications in Westfield, NJ, has seen his shop grow from just himself to five employees in the past two years. He spoke with five brokers when looking for the right combination of costs and benefits for his plan, but he also came up with a novel way to cut costs. Jaffe agreed to take on a local municipality as a client if the town would put him on its health-insurance plan. In December, he became community outreach coordinator for the New Jersey town and charges it a lower fee than he might otherwise have so that he can be on its health plan. "Everybody's happy. The mayor's happy; the town council is happy," Jaffe says. And he's happy - he estimates he's saving his agency $1,800 a month, more than $21,000 a year, by not having to secure health-insurance coverage for himself and his family. Jaffe might have found a unique way to cut costs. For most PR shops, however, it's more a matter of reviewing options and finding the best rates. Sterling offers five options, known as a cafeteria approach, in which staffers pay more based on what level of benefits they'd like to have. The Sterling cafeteria features two preferred provider plans from Blue Shield, two HMOs from Blue Shield, and another from Kaiser, an HMO that operates in California. Sterling pays a base amount of premiums for every employee. Employees then decide if they would like to pay more to get more extensive benefits, Lundstrom says. Employees in the firm's Washington state office only have two options, however, because the HMOs aren't available in their area. Sterling reviews its coverage yearly. "We rely pretty heavily on our broker to do the legwork and get the bids. They have the experience, and they've negotiated with [insurance companies] before," Lundstrom explains. The SheaHedges Group in McLean, VA, works with a broker it found at a networking event, says Reggie Kouba, VP of operations. "I highly recommend using brokers who have been used by people you know," she says. "Find out what their level of service is. They can educate you on the process." A broker might help when problems arise with claims, for example. Rod Whitson, president of San Diego-based Townsend, considers health-insurance costs such a major operating issue that he personally looks at health-insurance bids each year, rather than delegating that job to subordinates. He has increased employee co-pays from $5 to $30 over the past two years to hold down premium increases. He is also considering offering staffers medical savings accounts. Employees could deposit money in such accounts to pay for medical needs. The firm could then get a health plan with higher deductibles and out-of-pocket expenditures, which would carry lower premiums. Whitson shows the agency's balance sheet to employees so they understand how much healthcare costs the firm. "We want to educate them about the business," he says. "People are amazed at the rate of premium increase." By opening his books to employees and discussing alternatives for health coverage, "it becomes more of a community problem," he explains. Health-insurance costs can be a problem, but agencies are working creatively with their brokers to find solutions that they can afford and that are attractive to their employees. ---------- Tips on health-insurance plans
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