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
allow the 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
be utilized to 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-/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 (619) 584-6400 ext. 3235 or
[email protected].
