What can we do to reduce our insurance costs? This is the number one question our clients are asking; this is our second post on this topic.
It is simply not possible for most of our clients to absorb double digit premium increases. But no one wants to be responsible for leaving employees with unaffordable medical bills. What to do?
We are working with clients to hold the line on their insurance costs and keep employee satisfaction high. First, of course, we do a market review to be sure that they are getting the best price for the plans they offer. Too often, we find that there is very little pricing difference between carriers.
#1: Setting a New Base Plan
In uncertain times, maintaining your current health insurer often provides the most security to employees. We’ve described this strategy before; it has become very popular this fall. We retain the current insurer by restructuring the benefits offering. We select a lower level plan that is priced about the same as the current coverage. The employer sets the new plan as the base plan and continues to pay the same percentage of the premium as they paid last year—75%, 90% or even 100%.
Employees have a choice: they can select the new base plan and hold their own costs level, or they can buy up - with their own pretax dollars - to the higher benefit plan. We have found that many employees who are paying the cost of their family members’ coverage especially value the lower priced option.
The success of this approach is determined by the care with which we select the base plan. We know from years of experience that anyone, at any time, can face a serious medical problem. We make sure that everyone is protected.
#2: Saying Goodbye to HMO’s
Remember when HMO’s were the lowest cost health plans? Not anymore. HMO’s with low out of pocket costs for employees have become high cost plans for employers. When we compare the premiums of HMO and high deductible PPO plans, we often find that everyone wins with selecting a high deductible plan and including an employer contribution to the pretax Health Savings Account.
Employees value this approach because they can keep their current doctors. And they like seeing that cash in their accounts.
#3: Moving to Kaiser
Some clients are deciding on a more significant change in their benefits package. Rather than continuing to offer a choice of PPO and Kaiser plans, they are moving everyone to Kaiser.
We have found that this approach finds the most acceptance in two situations: one, where there is already significant Kaiser enrollment, and two, where the economics of the company and the cost of current coverage requires a dramatic change. We ease the transition process by careful planning: selecting Kaiser plans with comparable benefits, lowering the premium cost to employees as well as the employer, and conducting employee meetings.
One client who made this change with great reluctance last year, has reported no complaints once employees began using the plan and he and his wife have been very satisfied with their care.
Employee Communication is Key to Success
While we take care to craft a solution that fits with our clients’ culture and employees’ needs, communicating well to employees is key to employee satisfaction. We provide clear messages, conduct informative enrollment meetings, and provide individual counseling with concerned employees.
Looking Ahead
Is there any relief in sight?
We are hopeful that the public review and scrutiny required by the new health reform law will provide some clarity on the source of these premium increases.
Insurers point to the escalating cost of health care to explain their premium increases.
Starting in 2011, insurers will be required to spend 80% of the small group premiums they collect on health care and related expenses (minimum loss ratio). If insurers spend only 70% or 75% of your premiums on health care, then you will receive a rebate.
Planning for 2011
It is not too late to review your plans for 2011. We’re here to help. Contact us today.
And do share this post with your friends and business associates. They’ll thank you and we’ll appreciate your support!
