MEDFIELD, Mass.- April 24, 2002-While other employers fret about yet another double-digit increase in health insurance costs, Jim Carey, president of Slade's Ferry Bank in Somerset, Mass., isn't worried. For the past seven years, this community bank serving Southeastern Massachusetts contained costs while still offering employees a top-of-the-line health plan.

What's his secret? Rather than accept insurance carriers' off-the-shelf plans, Carey worked with benefits management firm Benemax to design a plan built on "defined contribution" principles, resulting in a cumulative savings of $400,000 for the bank.

"There are alternatives to expensive, cumbersome and restrictive HMO plans," says David Cowles, Benemax co-founder and executive vice president. "Employers can offer full coverage and full choice, without decimating the bottom line." Since 1985, Benemax has spearheaded the drive to structure health plans that save companies money and improve employees' benefits.

Employers Are Signing On
According to the Kaiser Family Foundation, enrollment in HMO plans declined nationwide from 28 percent in 1999 to 23 percent in 2001, while Benemax-designed health plans have been gaining converts. For three straight years, Benemax's client base has grown by more than 30 percent per year and growth topped 40 percent in 2001.

In a nutshell, here's how a defined contribution health plan works: Employers reduce fixed costs by buying less insurance, that is, plans with lower premiums and higher deductibles and co-pays. The employer makes up the difference by setting aside a portion of the premium savings to pay for covered health care expenses. Employers can use different mechanisms such as personal care accounts, flexible spending accounts or medical reimbursement plans.

But a higher deductible doesn't mean higher overall health benefit costs. On an annual basis, employers will nearly always save more on premiums than they will spend reimbursing their employees' medical expenses.

Says Jim Crosby, president of Crosby's Markets, a five-store supermarket chain north of Boston, "Under a traditional plan, it was difficult to figure out if our employees were well served for the premiums we paid. Benemax sorted it out for us and came up with a package that doesn't cut corners, and lets me contain costs year to year."

And Nashua, N.H.-based International Manufacturing Solutions, with a veteran workforce in several states, has seen its costs decline dramatically since switching to a Benemax-designed health plan.

In the March 2002 issue of Managed Care, managing editor Michael D. Dalzell observes that HMOs are wary of the growing acceptance of defined contribution plans. "HMOs won't disappear," says Cowles. "But employers are enthusiastic about providing popular plans-without the sky-rocketing costs. Now they understand that there are different ways to deliver and fund health benefits."

About Benemax
Benemax, based in Medfield, Mass., (www.benemax.com) was founded in 1985 and manages employee benefits for clients ranging from start-ups to entire divisions of Fortune 100 companies. The company designs and administers cost-effective health benefit plans that preserve employees' freedom of choice in selecting health care providers and services.