As businesses struggle to reduce their health insurance premiums, they are susceptible to sales approaches that promise significant cost savings. While we all know to beware of an offer that is too good to be true, insurance is so complicated that we have seen very smart business people make costly mistakes.
No small business can afford an in-house benefits expert. That’s why our clients rely on us. In the words of one client, “you cover my back so I don’t have to worry.”
This post warns you of two costly mistakes.
Mistake #1. Not knowing your employees’ potential claims liability
“What a nightmare! The insurance rep never told us that we’d have to pay $5000 before our insurance started paying. We agreed to a $2500 deductible—not $5000!
The owner of a San Francisco firm purchased her company’s health insurance. A high deductible plan sounded like a good buy. Then, her spouse was injured in a car accident. She was shocked to find out that she was responsible for double the amount she had planned on. The plan required that she pay twice the deductible (once for herself and once for her spouse) before her insurance began paying the bills. The use of these “family deductibles” is customary in high deductible HSA plans.
When this firm was referred to Shargel, the business owner found that we take care to inform our clients of the tradeoffs between reducing insurance premiums and increasing employees’ out of pocket health care expenses. Then decision makers are confident that they are making informed choices. We conduct enrollment meetings, employees receive accurate information, and everyone knows what to expect. We ensure that there will be no costly surprises.
Mistake #2. Cutting costs by using limited physician networks
“I never heard of a ‘narrow’ network. It was HealthNet and it saved us more than 5%!”
It seemed like a no brainer. A representative of our client’s new insurance company called with a suggestion; by moving to a different provider network the organization could save money. The recently hired Human Resources administrator knew that her non-profit was strapped for cash; here was a way to save more than 5% on their insurance costs. “Yes”, she said, “we’ll go with your recommendation for HealthNet’s silver network.”
That one phone call, reported to no one, caused temporary havoc. A few days after the new plan began, Shargel account manager Cecilia Paul received an urgent, upset phone call from an executive of the organization. When she had called to make an appointment, she was told her doctor was not part of her new plan. We were confused. We knew that our client wanted access to certain doctors and presented only plans that included their employees’ physicians. What had gone wrong?
It took some work for Cecilia to discover the network change. Of course, we corrected the error and our clients can see the doctors they have come to trust.
However, we anticipate much more confusion in the near future. Many insurers are now putting together smaller networks of health care providers and hospitals. These networks pay providers less. Providers see more patients. While more common in Southern California, “narrow” or “skinny” networks are heading north. Another euphemism you may hear is “high performance networks”.
We urge you to consult us before making any carrier recommended changes. As account manager Cecilia Paul says, “You don’t know what you don’t know.” So always call or email. We’re here to prevent problems.
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