August 31, 2006
Health Care Costs in Midsized Law Firms
Recently Juris, Inc. asked midsized law firms about health insurance—155 firms responded to those questions.
Respondents reported an annual inflation rate of 10 percent for health care costs. Considering employee compensation accounts for 60 percent to 80 percent of firm operating expenses, a 10 percent yearly rate increase will eat away partner income pretty quickly.
Only 35 percent of respondents indicated that they have raised co-pays to manage costs. Only 59 percent indicated that they had competitively bid their health care program.
Inflation in employee health care is presenting a real cost-management challenge to all businesses. Midsized law firms may forgo efforts to negotiate lower rates due to a feeling that they do not have the necessary critical mass for negotiating leverage. That is wrong. You can lower rates or avoid double-digit increases by shopping around, especially if you are willing to accept higher co-pays or deductibles.
Start shopping six months before your renewal date. When it’s renewal time, it is too late to shop.
Firms reported an average health insurance premium of $594 per employee. Over half of the reporting firms have cafeteria plans, and only 10 percent have fitness and wellness programs.
Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
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Filed under Expense Control by Tom Collins