Dealing With Health Insurance Is Like Getting Poked In The Eye!

If you are like most small and mid-sized business owners or managers, dealing with your employee benefits renewals is about as enjoyable as getting poked in the eye with a stick; especially now that many requirements of health care reform are starting to kick-in in earnest.  With so many important variables, it seems nearly impossible to actually compare plans and simply see the bottom line impact on your company and your employees.

Here at YPP, we do all of the work in conjunction with our broker, and so our clients simply “let the PEO figure it out!”  We have had a great deal of success in the past few years in keeping our rate increases manageable, while maintaining strong benefits for our clients and their employees.  We credit our results to (a) starting early so we have time to do a full evaluation of options, (b) looking at all of the variables that go into the total cost (and keeping a keen eye on “cost-shifting” to employees that can have a very negative impact), and (c) having a very strong partnership with our broker.

If you are going to attempt this on your own, here are some important reminders that we use in evaluating our annual employee benefits renewal for our clients and their employees.

First, start with the overall rate increases for your existing plan(s).  If you are a small group, that may include a change in your RAF (risk adjustment factor), so be sure to factor that in to your calculations.

Next, you have to take into account plan features that can have an effect on total cost – especially deductibles, co-pays, out-of-pocket maximums, and the specifics of prescription drug coverage (which may have a separate deductible).  We have found that many carriers are making changes to these features in order to keep the premiums down.  So, it is important to “do the math”.  For example, if the monthly premium went up $100, you might think that is quite an increase.  But, what if the carrier was able to keep the premium increase to only $50?  That seems a lot better.  But, if the deductible was increased by $1,000 to make that happen, then the total cost actually went up more than the $50 monthly premium increase ($600/year)   This is a common way that carriers keep your cost down, since it is your employees who are absorbing that $1,000 deductible increase, But in total, is that the best solution for the company and your employees, and is the premium savings worth the cost impact to employees?  Unfortunately, as we noted, there are a myriad of other variables that can affect total cost and you need to take them all into account as there is no magic, “apples-to-apples” comparison.

Finally, you need to keep your eye on health care reform.  Not just the reporting and disclosure requirements, but also the non-discrimination rules and “adequate and affordable” coverage rules that may require eligibility or plan changes.  If you are going to be forced to make changes in 2014, you may want to “bite the bullet” and get those changes done now so that you don’t have to make plan or carrier changes two years in a row.

Regardless of the strategy you take for the business, you need to make sure that over the next few years that you have an expert in your pocket on these issues because there will be lots of decisions you will need to make. Now is the time to start meeting with and engaging those experts.

If you need help with any decisions in HR/Benefits Administration that will need to be made due to all of this chaos, pick up the phone and give YPP a call, and let’s talk about adding the HR Divas to your team of experts.

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