Poor Health
If you're waiting on the government or anyone else to do something about the rising costs of health benefits, face facts: If you want costs cut right, you have to cut them yourself.
When Kiersty Lombar was shopping for health insurance for the
seven employees of her year-old online coffee and gourmet-foods
company, she faced two challenges. "We had limited funding,
yet we needed a competitive benefit package to recruit
people," she recalls. Lombar, 27, worked with an online
insurance broker to find the right plan. She finally settled on a
Preferred Provider Organization (PPO), a form of managed care that
offers more freedom and a wider range of choices than the
traditional health maintenance organizations (HMOs).
Today, Lombar's company, The Perk.Com, offers generous
health-care benefits. The Austin, Texas-based company pays 100
percent of its employees' costs and 60 percent for spouses.
"It's important for us to take care of our
employees," reasons Lombar. "We see this as a recruiting
and retention tool. Even though we felt like we were at the mercy
of the insurance companies, we decided it was something we
couldn't cut back on."
To offset the cost of health insurance, The Perk.Com keeps tight
control on salaries and other overhead. No fancy offices for this
Internet start-up. "We don't have a whole lot of beautiful
furniture in our offices," says Lombar. "Health coverage
is more important to us."
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Ellen Paris is Entrepreneur's "Management
Smarts" columnist.
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