Group Health Plans: Your Questions Answered
We constantly hear from employers that their health insurance premiums are skyrocketing year after year.
WHAT IS THE ROOT CAUSE OF CONTINUALLY RISING RATES?
There are numerous reasons why healthcare costs continue to be on the rise. For one, the cost of “delivering” care has continued to increase, most notably in the pharmaceutical space. More importantly, however, is that Americans, by and large, are still poor “consumers” of their health care.
WHAT CAN EMPLOYERS DO TO CHANGE THIS “POOR CONSUMER” CULTURE WITHIN THEIR WORK FORCE?
One of the most important things employers can do is EDUCATE their employees. We are big proponents of not only educating them on how their health benefits are designed but also on how to best utilize those benefits.
WHAT TYPE OF HEALTH PLAN STRATEGIES DO EMPLOYERS HAVE AT THEIR DISPOSAL TO DECREASE AND CONTROL HEALTH INSURANCE PREMIUMS?
For years, employers and employees alike have been accustomed to what I refer to as a “Cadillac” type of health insurance plan. However, year after year, these plans have continued to become less affordable, forcing employers to make difficult decisions like whether to shoulder the burden of the increase in premium themselves, pass the in-crease on to the employees or slash the benefits in order to maintain the same premium cost. Enter secondary insurance. Secondary insurance has been our strategy of choice for our fully insured clients for many years now.
Secondary insurance works in conjunction with the group’s primary health insurance plan. The strategy consists of substantially raising the deductible on the primary health insurance plan (typically to $5,000), which creates significant premium savings. Next, we take a portion of the savings and use it to purchase the secondary plan. We design the secondary plan to cover much, if not all, of the primary plan’s new, higher deductible. Since rates are based on claim utilization, shifting the claims away from the primary insurance carrier is vital. The net result is a “Cadillac” type plan at a “Yugo” type price.
SO, CAN EMPLOYERS AFFORD TO “KEEP THIS UP?”
Yes, they absolutely can. The key is partnering with an advisor, like myself, that can lead them in the right direction by helping them with their health plan design, and then educating their employees on how to best utilize their health benefits. We are ready, willing and able to do just that.
MEET THE EXPERT
BOBBY TROTT, HEALTH & EMPLOYEE BENEFITS RISK ADVISOR, HARMON DENNIS BRADSHAW
Bobby Trott is a Health & Employee Benefits Risk Advisor at Harmon Dennis Bradshaw.