How can we reduce our costs? That’s the #1 question our small business clients are asking. We are all stunned by the continuing double digit health insurance premium increases.
But clients always have additional priorities. They want to reduce costs but they also want employees to be able to keep the same doctors, or have a choice of plans or have an HMO option. The list is as varied as our clients.
It is our job to question and probe to identify all the priorities. Then we craft solutions. Benefit plan design requires both market expertise and creative problem solving.
This blog post describes three of the many different strategies we are using to reduce costs for our clients while keeping employee satisfaction high.
#1 Small Employer Purchasing Pool—Cal Choice
One of our non-profit clients came to us with the urgent requirement to reduce benefits costs by 30%. The obvious and certainly reasonable solution was to enroll the group in Kaiser. Everyone would continue to have comprehensive coverage with low out of pocket expenses. But there was another compelling issue: two employees were in the midst of treatment for serious health problems. It was essential that they continue with their current doctors.
We proposed using Cal Choice, a small employer purchasing pool. Cal Choice provides employees with a choice of health insurers and plan designs. The organization selected a Kaiser plan as the base plan and determined an affordable cost sharing split with employees. Each employee also had the option of purchasing any other plan in the pool. The employees with health issues chose to pay the difference in premium between the base plan and their preferred plan. Their treatment continued without interruption.
#2 Association Plan—Cal CPA Society Group Insurance Trust
Our recommendation for a CPA firm was quite different. They received a whopping 70% increase for their Blue Shield HSA compatible, high deductible health plan. There was no way they could afford that increase. Our client ruled out moving to a higher deductible plan—that would place too great a burden on staff.
Our market review showed that other insurance carriers had comparable pricing. We looked further afield. We recommended an association plan open to members of the California Society of CPA’s. Instead of the 70% increase, we delivered a 7% decrease with a manageable increase in the deductible. The firm continues to cover the same percentage of the premium and deposits $125 monthly into each employee’s HSA plan.
#3 “Buy Up” Plan Structure
The third strategy we call the “buy up” approach. A client who always provided the highest quality benefit plans for her staff could no longer absorb the yearly premium increases. But she also did not want to give up offering these plans. A number of her employees had significant health issues and valued the coverage. She saw her benefits offering as her competitive advantage in the marketplace. How could she control her costs while continuing to offer these plans?
We added additional choices to the benefits offering. The employer fixed her contribution to a lower priced, but very acceptable plan. Bottom line: She kept her costs level with last year. Employees all chose to buy up to the higher cost plan with pretax dollars.
What to Do Next: Start Planning Early
Our best advice for the fall: Start planning early for your January renewals and benefits redesign. Give yourself sufficient time to make good decisions, hold employee meetings and have new coverage approved before the holidays.
We’re here to help!
Comments