With the rising cost of health care, employee health insurance is often one of the top five P&L entries for small business owners. How can you control your health insurance spend? Ron Linneman, an Employee Benefits Consultant with WA Group, dispels three myths in the industry about employer health insurance:
Myth 1 – you’re limited to only four health insurance carriers – Blue Cross Blue Shield, HealthPartners, Medica, PreferredOne, (now United Health Care).
The truth is, there are five different ways employers can finance health care. Most carriers show employers only one or two ways. Since health premiums can be costly, it’s critical to explore ALL your options. Remember; markets are different than carriers and there are only certain carriers in each market.
Takeaway – identify a broker partner who will educate you on all five ways to finance health insurance. Compare and contrast the proposals you receive from all five markets to select the best one for you. Note: many brokers receive indirect compensation (in addition to commission) from these four carriers. This may be why some brokers don’t mention certain options that are available to you.
Myth 2 – shopping your carrier, raising deductibles, and changing premium contributions are your only ways to control your health insurance spend.
Imagine if your car insurance kept increasing because you were constantly getting speeding tickets. Do you think it would be more effective to continue speeding and shop carriers to reduce your spend or take your foot off the gas? Every one of your employees will eventually be using the health care system – whether for just an annual physical or for ongoing treatment of a chronic condition. If your company can help your members find the best care, at the best place, for the best price, you will be in the best position to control your health insurance spend for years to come.
Takeaway – align yourself with a broker partner who has resources in place to simplify selecting and managing health insurance for you and your people. Ask them to show you their process and introduce you to their advocacy team. Finally, request case studies from their clients that demonstrate the results you’re looking for.
Myth – a 0% renewal is a good renewal
The loss ratio of your health insurance plan drives the increase or decrease in your renewal. The loss ratio is the difference between claims paid by the carrier and premium paid. For example; if Company A paid $100,000 in premium and their health insurance carrier paid $75,000 in claims, it would be a 75% loss ratio. In addition, if Company A paid $100,000 in premium and their health insurance carrier paid $125,000 in claims it would be a 125% loss ratio. Most of the time, if you end up with a 0% renewal, your loss ratio is less than 100% because your health insurance carrier retains the difference between premium paid and claims paid out. Why not position yourself to retain these health plan profits? Not doing this is like over-paying taxes to the government — who likes to do that?
Takeaway – align yourself with a broker partner who will not only show you health plans that allow you to keep profits but more importantly, show solutions that can maximize these profits. It will enable your company to build a better health plan for your people without having to increase your health plan budget.
To avoid falling prey to myths like these, reach out to an employee benefits consultant or broker partner today!