It’s no surprise that in today’s difficult economy, many people are finding it hard to make room in their budgets for the basic essentials in life. This is no different for business owners trying to do the right thing and maintain their health and life insurance plans for their employees. Life insurance and health plans are costing more and more each year with many plans becoming simply too costly to keep for many smaller businesses. When it comes down to a matter of dollars and cents, many business owners are faced with the decision of cutting life and health insurance coverage for their employees instead of laying off some of those employees to keep costs down.
Economy, Rising Life Insurance Premiums Squeeze Employers’ Bottom Lines
The hard economic conditions that many businesses face now are directly related to stagnating sales and industry slumps that affect a business’s bottom line and operating costs on a weekly basis. The only way that many businesses – especially smaller ones with 2-30 employees – can handle the matter, is to really take a long, hard look at what’s important.
Providing excellent health and life insurance for employees is costly, but cutting the work force may be just as costly in the long run. Many employers are opting to reduce the level of coverage in their plans in order to keep costs down and keep more employees working. Costs for life and health insurance are outpacing many other costs of doing business and it’s affecting these smaller businesses the hardest. Many companies renewing business policies are reporting cost increases of 12-15 percent with some plans costing 30-40 percent more, based on health and demographic figures.
Employers Cutting Losses by Cutting Life Insurance Benefits
In an effort to cut their losses, many employers are cutting their own contributions to employee plans by raising deductibles, cutting benefits and increasing the employee share of the plan cost premiums. This takes the burden off of the employer to provide a high level of coverage, while encouraging the employee to take more responsibility for their own health care. By having each employee become more responsible for their own share of the health plan support, the company can keep health care costs down to a more manageable level.
photo credit: clementine gallot