Health Insurance Renewal – Part 1

Every business owner cringes when he opens the bill for his company’s health insurance.   Each year the cost increases while he decreases the benefits to help rein in expenses.  It’s like watching a hamster running in a wheel.  Nothing changes – employers are frustrated, employees are disappointed, and costs keep increasing. 

There are millions of healthcare plans renewing in January 2023.  About 60 days before this, employers will be notified of the new premiums for their benefit plan. The trade publications have indicated the news will not be good, siting the average renewal will be 13% or higher. In this series we will explore ideas employers can use to mitigate these increases.

Prepare ahead of time

It is important to understand how your employees are (or aren’t) using the health insurance program.  A simple survey will help determine the strategies to employ to reduce cost.  Here are examples of questions to ask:

• Are your spouse and/or children covered by this plan
• Are there are enough doctors to satisfy your needs?
• How often have you seen a physician in the past year?
• How much of the deductible dis you spend last year?
• How many prescriptions do you fill each month?
• Would you be willing to contribute more for higher benefits?
• If it would reduce the cost of my contribution to the health insurance plan, I would be willing to pay a higher?
• Please list any additional benefits you would be willing to pay for if you could receive a discount for them because they were sponsored through your employer.

Talk to your broker and other brokers because you want to know if there is a different way to think about offering benefits. This is important if your broker doesn’t educate you about all your options but just deals with the existing plan design.  Also, talk to other business owners in your industry to find out what is the industry standard and how it fits with your enterprise planning. 

Review and Investigate

Now that you have an idea of what your employees need, use and want, it’s time to compare the current benefit plan to this information.  If employees mostly stay in-network, perhaps a base plan with in-network only benefits should be offered, alongside a plan that covers out-of-network benefits?  Employee who want to go out-of-network can pay the difference in the cost.

Should the renewal increase be passed onto the employees?  What percentage?  To reduce costs offering a high deductible plan. To incentivize employees to consider this type of plan consider funding all or part of the deductible with either a Health Savings Account (HSA) that both the employer and/or employees can contribute to or using a Health Reimbursement Arrangement (HRA) to self-insure all or part of the deductible. This will lower premiums without penalizing employees. Since most employees never meet their deductibles, the increase won’t be of concern. However, it will offer significant savings.  This is especially appreciated by younger employees who in most cases rarely us the health insurance plan.

How to Compare Plans

Evaluating plan options is a very important part of this process.  While price is important, please don’t base a decision to keep or change plans solely on this factor.  Your broker should provide you with a detailed comparison of not only the benefits but also the effect they will have on employees. 

Raising employee out-of-pocket costs without offer some way for employees to afford them can have onerous results.  This can cause valued employees to see other employment, reduce productivity and hence profits. 

When making comparisons here are some key things to consider:

• Look at the whole picture
• How will a change in out-of-pocket expenses affect employees
• Since claims drive costs, evaluate programs that can keep employees healthy
• Wellness programs
• Value based program that make it easier for employees with chronic conditions to comply with treatments
• Chronic condition management where there is a team that can assist in compliance
• Compare benefits
• Deductible
• Maximum out-of-pocket
• Internal limits for things such as physical/occupational therapy
• Authorization procedures
• Doctor networks – Make sure the doctors that are important to your employees participate
• Prescription formularies

Patrice S Goldfarb has been an employee benefits consultant for over 20 year. She can be reached at (201) 255-6239 or pgoldfarb@ebagroup.net