January and July are the most common months for group health insurance renewals, but before you switch plans, there are numerous issues to consider. If your plan's renewal is coming up in July, have you mapped out your game plan?
Here are some issues to think about.
* Who are you going to for advice? The two most common choices are to utilize a broker or a consultant. A small minority of employers purchase group coverage directly from the providers.
* Should you use a broker, a consultant or go direct to purchase for coverage? The real question is what value is received by each of these directions. If you use a broker or consultant, ask what value they bring to you and the participants prior to the sale of a new program, during the process of applying for coverage and afterward. If you are going direct, you may want to first consider whether you have the knowledge and market savvy to take on this challenge.
* Did you assess the pre-existing conditions in your group to see if it's even viable to go out to the marketplace this year?
* Did you study your existing plan before going out to the marketplace to assess strengths and weaknesses?
* Are you prepared to do a funding analysis?
* Do you know how to do a proper due diligence analysis? What about a contractual language analysis or basic benefits spread sheet analysis?
If your head is spinning, it's probably worth having a qualified broker or consultant assist you in the evaluation and purchase of your benefits package.
No matter which direction you choose, determining when to switch can be critical. Most providers require 30 days written notice before canceling coverage. If you cancel your existing plan without giving proper notice, your provider may send you a premium bill that it probably can collect on.
This risk is small, however, in comparison to the one you open your company up to if you purchase new coverage and send a cancellation notice before you have written approval from the new carrier.
Potentially, if your group has more than 50 eligible employees, a provider may deny coverage based on its group-underwriting guidelines. That means you've just found yourself self-insured.
There are many other risks to consider as you think about your company's health plan. The most important factor is to be as well informed as possible. Robert Arnoff (firstname.lastname@example.org) is president of Arnoff and Associates Inc., an employees benefits firm. He can be reached at (440) 717-1775 or through his Web site at www.arnoffandassociates.com.
Out of the top four group health insurance providers that write group health, only one has an HSA available. Others are expected to follow suit, but have not announced when.
HSAs, like their precursor, MSAs (Medical Savings Accounts), have many appealing features.
* Premiums are 100 percent tax-deductible.
* Personal contributions into HSAs are tax-deductible.
* Deposits into HSAs accumulate tax-deferred, similar to a 401(k) and other retirement plans.
* There are catch-up provisions (in contributions) once someone reaches age 55.
* There are lower deductible limits to HSAs vs. MSAs -- $1,000 for single, $2,000 for family coverage.
* HSAs are fully portable.
* Lower premiums make this program highly attractive to cost-sensitive employers.
With so many attractive features, you'd think there would be a rush to jump on the HSA bandwagon. But consider a longer look before you leap.
A closer analysis of HSAs reveals several reasons why they might not be a good idea right now.
* Being the first one on the block to get the newest anything has historically been a timely mistake. Just look at Betamax videocassette recorders vs. VHS.
* More providers will be offering this program in the near future; the number of carriers offering it should at least double within two years.
* With competition comes better rates and a more informed seller and consumer.
* Your staff may be less understanding if you look into this too early.
* If your current schedule of benefits has no deductible or a low deductible offering, there are more planning considerations to take into account.
Employee benefits advisers are being asked to hurry to the marketplace by clients. But advisers must consider the possibilities of this program in overall benefits funding strategies. That said, however, it's imperative to move slowly with anything brand new.
Take your time before jumping in as an early adopter. Robert Arnoff (email@example.com) is president of Arnoff and Associates Inc., an employee benefits firm. Reach him at (440) 717-1775 or at www.arnoffandassociates.com