How to be a Savvy Purchaser of Health Insurance and Employee Benefits

What is a Good Health Insurance Plan?

• A good health plan provides comprehensive coverage that meets employee needs but does not exceed them. At the same time, the plan addresses the requirements of employees with special needs so they have access to care without financial hardship; and it rewards employees for taking responsibility for their well-being through preventive health programs.

  Whether you are considering or renewing a health insurance plan for your business, there are several key factors to keep in mind:

• ·      Most employees never meet their deductible (the average is 38%).
• ·      The average number of claims per person is 5 per year.
• ·      Younger employees rarely see a doctor.
• ·      Most (if not all) employees do not get admitted to a hospital for care.
• ·      Employees only appreciate the benefits they use.

• Preparing for Your Health Insurance Renewal

  When it comes time to renew your health insurance plan, the key to choosing the right benefits is to be prepared. I advise clients to start doing their research early. Mark the date your plan renews on your calendar and work backwards, starting no later than three months in advance of your renewal date.

  A good place to begin is to survey your employees to find out how they are using the current health insurance. You might be surprised to find out that features you thought were essential are not used at all – and that your team depends on ones you never noticed. Important questions to ask include:

• ·      Do they mainly stay in network?
• ·      How many prescriptions do they fill per year?
• ·      Are there physician relationships that are important to them?
• ·      What might they be willing to compromise on?
• ·      What additional benefits would they want if they could get them via an employer discount?

• The next step is to review your current plan(s) to determine how well they fit your employees’ needs and expectations. You should be assessing your plan’s fundamentals, including coinsurance, deductibles, employee eligibility, single vs. family coverage, funding, and employee contributions. Also review whether or not the plans support your enterprise planning. Remember that it’s okay to have more than one plan if different populations have different requirements.

  Talk With Your Broker, Other Brokers & Peers

  Once you have completed your fact-finding, it’s time to explore your options. All brokers have access to the same plans and approaches. What separates them is their understanding of your business, the impact of current legislation, and their creativity in implementing programs to best suit the needs of your employees, budget, and enterprise planning.

  Begin by talking with your broker about any changes in the marketplace, new legislative requirements and funding approaches. Review why you chose your current plan and share the information you have gathered about how your employees are using the plan and any problems they have encountered. Then ask your broker if there are other options you should consider.

  Many brokers will only show an employer a limited number of plans, thinking it is a waste of time to educate him/her about all of the options available. They prejudge and, in doing so, miss the opportunity to educate their client about the second highest business expense they have. As an employer, you need to know about every relevant option in order make an informed decision about where to spend your money. That’s why it is a good idea to talk with other brokers as well as colleagues in your industry about the programs they are using or recommend. The more information you have, the better you’ll be able to plan for the future.

  Things You Want to Know About

  Here are some of the key issues that should be discussed:

• ·      Additional options from the current carrier
• ·      Options from competing carriers
• ·      Self-insurance vs. fully insured plans
• ·      PEOs (Professional Employer Organizations)
• ·      Association Plans (if available in your state)
• ·      State/Federal Insurance Exchange – for qualifying small employers there is up to a 50% tax credit in the first 2 years
• ·      Tax Advantaged Programs:
• o   POP (Premium Only Plans) allow pre-tax contributions
• o   HRA’s (Health Reimbursement Arrangements) to self-insure high deductibles
• o   HSA’s (Health Savings Accounts) to encourage employees to become more aware of their health spending
• o   FSA’s (Flexible Spending Accounts)
• ·      Incentives to encourage a healthy lifestyle
• ·      Dependent Coverage
• ·      Voluntary Benefits
• o   Allow employees to choose plans to fill in gaps in coverage
• ·      Will the plan comply with price transparency requirements?

• How to Compare Plans

  When comparing insurance plans, make sure you look at the whole picture. The last thing you want is to save on the cost of insurance but end up paying more for care than your savings in bills. As for specifics, it is critical to closely compare the following:

  Benefits

• ·      Copays (office visits, hospitalization, Rx)
• ·      Deductibles (in-network, out-of-network, Rx, hospital)
• o   Maximum out-of-pocket limits
• ·      Internal plan limits (i.e. physical therapy)
• ·      Authorization procedures

• Networks

• ·      Make sure the doctors that are important to your employees participate.
• ·      Check to see that there are a sufficient number of doctors within 10 miles of employees’ homes.

• Drug Formularies

  Pricing/Funding

  Putting It All Together

  Don’t expect to do all of this work yourself! A good broker will handle most of the legwork for you. However, being a savvy health insurance purchaser means having a clear understanding of what your business and employees need – and making sure the benefits match those needs. To achieve these goals, remember to:

• ·      Give yourself enough time to do your research
• ·      Survey your employees
• ·      Talk to more than one broker
• ·      Don’t offer first dollar benefits for services rarely used (i.e. hospitalization)
• ·      Offer more than one plan if you have a diverse population
• ·      Use incentives to encourage healthy behaviors/lifestyles
• ·      Pay a higher % for employees than dependents

Concerned about whether your health insurance plan is the right fit for you and your employees? Call us at 201-255-6239.