Easing the cost of health care is on the Committee on Small Business and Entrepreneurship's radar. Last year, the Senate debated a small business health care bill that resulted in a partisan divide. Addressing the skyrocketing health care costs for small firms in a bipartisan manner is a top priority this year, according to the committee's PR channels.
Franchisors can provide many things to their franchisees, but insurance coverage is not one of them. Because of insurance laws, a franchisor's employees have coverage, but franchisees—and employees of franchisees—do not. Franchisees, like any other business owner, are responsible for providing coverage for their own employees.
Franchises, such as Burger King, Sonic, KFC and Subway, have powerful franchisee associations that are beginning to offer health care coverage for members.
National Franchisee Association, which serves the Burger King franchisees added health insurance for members in 2003. “In addition to offering a comprehensive health-care plan to NFA members and their employees at very competitive rates, NFA Health+ alleviates the administrative and legal burdens commonly associated with this type of benefit, which allows franchisees to focus on their core business of restaurant operations,” says Frank J. Capaldo, NFA executive director and CEO.
Angelo Anello, the insurance program manager for IPC, the independent purchasing cooperative for Subway franchisees, says IPC originally started as a way to negotiate with wholesalers for the best rates on produce, meats and cheeses, and then last year realized it could do the same for insurance for its members.
Anello works with New Benefits to provide several options including major medical, along with some non-traditional plans.
“We provide something that's the opposite of major medical,” he says. “It's a limited health insurance program with a high deductible combined with a discount card. It's great for young people who are relatively healthy.”
According to New Benefits national sales executive Richard Fuchs, that kind of coverage seems to be the wave of the future.
“We're going back to a system we had in the 1940s, in which the responsibility for insurance was with the individual,” he says.
New Benefits was formed in the early 1990s, and its insurance agency arm, Stifeneb (benefits backward) pairs up traditional health-care plans with member discount cards that provide discounts on doctors' services and prescriptions. Focusing on numerous sectors including franchising, New Benefits currently serves some 11 million members.
New Benefits works with franchisors who recommend the coverage to their franchisees. New Benefits also negotiates contracts with major PPO networks, dental networks, and pharmacy distributors to provide substantial discounts on services and prescriptions.
Here's just one example of how it can work: An employee can choose coverage that has a high deductible, say $3,000 per year, with a low monthly premium. She pays for doctor's visits and the like (until she reaches that $3,000 limit) out of her own pocket, oftentimes using a health savings account. But if she has a New Benefits discount card, she will receive discounts on those doctor and dental services, and prescriptions. The discounts can be from 10 to 60 percent depending on the provider and the service.
Health care reform is gearing up at both the state and national level and the shape of coverage and who's responsible will be a hotly debated issue that will keep both franchisee associations and franchisors looking for creative solutions for years to come.
