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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.

This story appears in the April 2000 issue of Entrepreneur. Subscribe »

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."

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