While the nation's minimum wage was recently raised to $6.55 per hour and is scheduled to go up again in 2009, there's no denying that it's virtually impossible for employees in this income bracket to afford major medical health insurance. For these individuals — and a growing class of middle-income wage earners — limited medical plans can be the answer to their health insurance woes.
Let's face it, most employee benefits professionals are not salivating over the premium potential that exists in the low-wage marketplace. This got me thinking — which benefits work for this demographic and what are brokers missing?
Part-time, hourly and seasonal employees are often unable to qualify for or afford a company's major medical plan, if one is even offered. When someone is earning $6.55 per hour it is seemingly impossible to purchase much at all, let alone employee benefits. Fortunately, the maturation of the limited medical marketplace has provided a wide variety of plan offerings so individuals can select a plan that best suits their personal situation.
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Plan designs that hourly employees choose to purchase are available for under $10 per week. These plans have been tried and tested in the marketplace and have succeeded for several different reasons. First, plans are easy to understand. An hourly employee can quickly and clearly comprehend what they are purchasing and why they want to make the purchase. Second, the plans are guaranteed issue with no pre-existing condition limitation or deductibles, meaning that an employee will have benefits that are immediately available.
And just as important, these plans have been tested in many HR payroll and information technology departments. The implementation of groups with tens of thousands of employees involves many departments. Expertly navigating these departments to implement an effective payroll cycle billing program and enrollment strategy is critical. These strategies are key to working with employers who have large or small groups of employees that are paid on an hourly scale. Implement a program that is going to help HR do their job, not create a bigger job for them to perform.
Low wage earners have also been targeted for traditional worksite benefits: Life, Accident, Cancer, Short-Term Disability and Critical Illness. These products all have merit and can be affordable by themselves. However, all of these products specifically focus on protecting assets in the case of an accident or sickness. Most hourly workers have little to no concern over protecting assets and therefore enrollments are higher when hourly employees can purchase benefits that have utility on a day-to-day basis. Limited medical plans are the best fit.
Finally, the minimum wage change provides brokers with an opportunity to check in with existing clients. They should have made the wage change on July 24, 2008. Even if the employee was earning more than the minimum wage, the employer must take care to note that deductions for employee benefits cannot take the wage below $6.55. Consult an accounting or legal professional for further details, but keep in mind that by keeping your clients up to date and in compliance you will have served your profession well.
Brian Robertson is executive vice president of the Fringe Benefit Group, which markets and administers the Framework Health Plan. The Fringe Benefit Group has provided and administered limited medical plans for 20 years, and today its clients include many of the nation's leading retail, hospitality and staffing companies. Contact Brian at 800-551-3424 or [email protected].
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