The health care industry is a fluid market. Business owners should be active
members in managing their health care
options. Brokers and insurance providers
offer guidance that is essential for keeping
up with the constant changes in the market.
A business owner who remains active is
likely to find better health care prices because plan designs are always changing,
says David Fells, employee benefits consultant for Westland Insurance Brokers. With
new cost-sharing designs, health care costs
are decreased for employers, and employees are encouraged to become more active
in their health care options.
Smart Business spoke with Fells about
rising health care costs, methods employers
can take to reduce costs and optional benefits employers can offer to enhance their
health care package.
How do plan design changes and new innovations in the medical insurance market
influence rising costs?
With the limited number of carriers in a
consolidated medical insurance market, it is
essential to compare competing programs.
Comparing newly developed plan designs
that will lower premiums by increasing cost
sharing is necessary for any employer
attempting to reduce health care costs.
Employers have the option to change plan
designs during their renewal period to
lower their bottom line. This is an effective
way to substantially lower the premium
amount by slight increases in co-pays,
deductibles and co-insurance.
Employers can also introduce consumer-driven health plans (CDHP) or higher-deductible, HSA-compatible plans that give
employees more control of their health care
while keeping premiums in check.
What should business owners/employers be
looking for when they sit down with a broker?
Business owners do not want confusing
plan designs and benefits programs that
basically become an expensive underutilized benefit because the employees don’t
understand how they work. A good
employee benefits broker is a consultant first and foremost who will take the unique
company factors into consideration and
devise a simple, affordable program that is
easy to explain and administer.
Employers should look for a broker who
brings true value to the table. A good broker is the employer’s consultant and advocate. A broker should have a broad knowledge of the industry and experience in dealing with medical insurance carriers and
underwriters. You should look for someone
with whom you can have a rapport and
who is responsive and quickly resolves any
issues that may arise. Brokers should diligently shop the market, keeping a business
owner’s interests and concerns first, and
genuinely ‘go to bat’ for the client.
How does the network of providers influence
premiums?
Limited network programs are offered by
most of the group insurance carriers at a
substantial discount. Often when employers check their employees’ current
providers, they will find that they do not
need the more expensive expanded
provider network. Premiums for these limited network programs are substantially
less expensive.
To change to a limited network without
affecting employee coverage, it is necessary to see if you are eliminating any of the
physicians that your employees are currently using. A little homework before the
change can make for an easy transition for
you and your employees. Brokers should
hold open enrollment meetings to educate
the employees so they know how to effectively utilize their plan.
What should employers be looking at when
they get their annual renewal?
For groups with less than 50 employees,
the employer’s Risk Adjustment Factor
(RAF) is a key element in calculating the
premium. There is basically a 20 percent
variance in the RAF, so potentially, as companies grow, there is a 20 percent discount
a group can obtain given its size and particular situation. A good broker will shop the
market for current RAF promotions and
work to lower the RAF to its lowest possible number.
Choose only A-rated carriers and consider consolidating multiple lines of coverage
with one carrier to qualify for premium discounts. Consolidating coverage will also
lower the in-house administrative burden
and enhance control of the policy by leveraging technology and online administrative
services offered by the carrier.
How could the employer ‘sweeten the pot’ for
employees when premiums go up?
Adding ancillary voluntary benefits to a
group program, such as dental, vision or
short-term/long-term disability coverage,
that would normally only be available to
company employees and not individuals
sweetens the pot. This enhances the overall
employee benefits package offered by
employers, giving employees a menu of benefits to choose without adding to the overall
bottom line. This gives employees control
and allows them to buy up if they desire.
DAVID FELLS is an employee benefits consultant with Westland Insurance Brokers. Reach him at (949) 553-9700 x3235 or
[email protected].