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Employers Turn to Alternative |
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"Employers Turn to Alternative for Insuring Staff", by Chad Terhune, Wall Street Journal, July 30, 2007. More on
Video Clip: Paul Zane Pilzer is interviewed live on CNN re The New Health Insurance Solution, October 8, 2005.
Video Clip: Paul Zane Pilzer is interviewed live on the CBN's 700 Club re The New Health Insurance Solution, December 2005.
"When to Choose an HSA," by Kaja Whitehouse, The Wall Street Journal, September 25, 2005.
"Paul Zane Pilzer Checks the Pulse of Healthcare Insurance," by MC News, Management Consulting News, February 2006.
"Getting Cheaper Health Insurance," by Margaret Price, New York Daily News, November 16, 2005.
The New Health Insurance Solution, by Paul Zane Pilzer, Soundview Executive Book Summaries, December 2005.
Breaking from the Group, by Kevin Sweeney, Benefit News, November 2005.
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By Chad Terhune PARK CITY, Utah — Many small businesses have trouble providing health coverage because the costs of paying benefits for a handful of ailing employees drive up the premiums for their entire staffs. Now an entrepreneur in Utah, relying on a wrinkle in U.S. tax law, thinks he has found a way around the problem. His idea: Employers should stop providing group health insurance and help employees get individual policies instead. Paul Zane Pilzer, a 53-year-old economist, occasional rabbi and author of books like "God Wants You to Be Rich," isn't just concocting theories. His sales method has drawn interest from insurance giant UnitedHealth Group Inc. His company, Zane Benefits LLC, has signed up more than 300 employers covering around 3,000 people since opening in March 2006. A company led by America Online founder Steve Case and a unit of Wal-Mart Stores Inc. have teamed up to market the idea to small business. Mr. Pilzer is among a growing number of people — politicians, policy makers and others — scrambling to find alternatives to the U.S. system of employer-provided insurance. Some merely want to fix a system that leaves millions uninsured; others are looking for ways to profit from patching together the system. None of the solutions so far is perfect, but Mr. Pilzer's is gaining traction. Critics say his plan doesn't take account of those people who can't get individual coverage because of previous or existing illnesses. Mr. Pilzer says they can get help from their state or other sources. With many companies dropping group coverage, "we believe something is better than nothing," says Bryce Williams, chief executive at a subsidiary of Mr. Case's company involved in the marketing. Critics say the concept violates the fundamental principle of health insurance: that the well help pay for the coverage of the sick. "It's poor public policy," says Greg Matis, counsel for SelectHealth, a Utah insurer that won't cover workers this way. "Here it will only be healthy people who get individual policies, and the ones who need coverage the most — the highest-risk people — will be left holding the bag." But Mr. Pilzer believes it's better for individuals to buy their own health-insurance policies because, under state and federal laws, the policies can't be terminated for health reasons. By contrast, workers who lose group coverage when they're laid off or change jobs may not be able to replace it. He also contends that, with individual policies, consumers pay only for the benefits they want, avoiding the bells and whistles in employer plans that drive up health costs. "I feel I'm doing God's work switching people from group plans to individual insurance," he says. He likens his philosophy to the shift in recent decades to 401(k) retirement plans, where employers provide tax-deferred dollars and it's up to employees to invest them. "Employers will be relieved of a crushing moral and financial obligation that they should never have taken on in the first place," he says. Some say Mr. Pilzer's setup violates a federal law requiring that employers offer coverage to everybody or nobody. Texas insurance regulators have warned employers not to try the idea, saying it discriminates against sicker workers. "I think this is blatantly illegal," says Mila Kofman, an associate professor at the Georgetown University Health Policy Institute and a former Labor Department official. "I would not advise any employer to do this." |
Mr. Pilzer calls his plan legal, and so far the federal government hasn't said anything to the contrary. The Department of Labor says it is aware of the controversy and is consulting with other parts of the federal government over possible clarification of the rules. According to the Kaiser Family Foundation, 60% of businesses offered health benefits in 2005, down from 69% in 2000. Employer premiums for family coverage rose 81% since 2000 to $11,480 annually. The tax wrinkle used by Mr. Pilzer involves something called a health reimbursement arrangement, or HRA. Employers set aside a certain sum every month, say $200, that employees can use for health expenses. The employer can write off the expense for tax purposes, just like traditional health benefits, and the money doesn't count as taxable income for the employee. The tax advantages of HRAs resemble the better-known health savings accounts, or HSAs. Both plans are sometimes used by large employers that offer comprehensive benefits and want to supplement it by giving employees tax-free dollars for noncovered medical costs. The key difference is that employees can use the money in an HRA, but generally not an HSA, to buy health insurance. That's why an HRA can be used not just to supplement health insurance but also to buy it. At a business with generally healthy employees, an HRA plan, in effect, allows the owner to cover a good chunk of most people's insurance bills at a fraction of the cost of a traditional group insurance plan. The idea is especially attractive to small businesses that don't have the leverage to drive a good bargain for group coverage. Helen Griffin, owner of IT Pros in Overland Park, Kan., was fed up with soaring premiums her insurer was demanding. The technology firm this year began offering a $100-a-month HRA allowance, plus an additional $200 a month for workers with a spouse and children. Ms. Griffin says all five of her full-time employees were able to find individual coverage. She and her husband paid a combined $330 a month for their policies, down from $800 a month paid by the company when the business had a group plan. Businesses with only a handful of employees often pay high group premiums, because insurers must accept all employees and they keep rates high to protect against large claims. "The biggest thing for us: No more increases," says Ms. Griffin, referring to her previous group plan. Critics say a system like the one at IT Pros encourages employees to pick a bare-bones policy with low premiums that may exclude coverage for pre-existing conditions, maternity care, or other major medical needs. |
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| PUBLICATIONS |
 The
Next MillionairesExplains how you can become of the the ten million new millionaires that will be created between 2006-2016. |
 The
New Health Insurance SolutionHow to get cheaper, better health insurance from birth to old age without an employer plan. |
 The
NewWellness Revolution How to make a fortune in the next trillion dollar industry--preventative medicine and wellness. |
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 New
York Times BestsellerGod Wants You To Be Rich Explains how our economic system is based on our biblical heritage, and you can prosper materially and spiritually. |
 Fountain
of WealthAward-winning 6 CD (or cassette) audio series explains the new opportunities for creating wealth in the 21st century. |
 Other
People's MoneyPilzer's first book, exposing the S&L Crisis and the history of savings in America. |
 Unlimited
Wealth Pilzer's seminal work explaining how we live in a world of unlimited physical resources because of rapidly advancing technology. |
 The
Next TrillionWhy the wellness industry will exceed the $1 trillion health care (sickness) industry in the next ten years. |
 Real Estate
ReviewCollection of articles on the guidelines for success in commercial real estate investments. |
 The
Wellness Revolution How to make a fortune in the next trillion dollar industry-- preventative medicine and wellness. |
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