Renewal rate too high? What to do about your group plan

Posted by Emily Kubis on Wed, May 23, 2018 @ 08:05

Before you consider cutting your group plan benefits, read this.

If you’re a fully-insured employer who just received a huge rate hike on your group plan renewal, you may be considering cutting benefits or changing your plan design.

Instead, you may want to consider a change to your funding strategy. Employers have more choices than they realize when it comes to financing their employees’ healthcare. Purchasing a fully-insured health plan may be what you’ve always done, but there are a lot of alternatives that aren’t as complex as they seem.

These strategies can potentially save your organization tens of thousands of dollars, while allowing you to actually expand benefits options for your employees.

(More: How a 40-employee group saved $100,000 with reference-based pricing.)

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Tags: health insurance small employers, Self-Insured, self-insurance, self-funded, reference based pricing, renewal rate

Reference-based pricing: What about balance bills?

Posted by Emily Kubis on Wed, May 09, 2018 @ 08:05

Solutions for employers

Reference-based pricing is a new way for self-insured employers to pay for employee’s medical costs. Instead of using a traditional insurance carrier’s network, employers simply pay hospitals a percentage in excess of Medicare’s reimbursement rate for the same service.

Why would employers adopt this plan?  Generally, the benefit that insurers provide to employers are their network discounts for services. But with healthcare prices skyrocketing, employers are questioning whether this strategy provides enough value.

(More: How a 40-employee group saved $100,000 with reference-based pricing.)

Here’s how hospital pricing usually works.

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Tags: health insurance small employers, Self-Insured, self-insurance, self-funded, reference based pricing, balance billing

What is the Medical Loss Ratio?

Posted by Emily Kubis on Fri, Apr 06, 2018 @ 08:04

Is the MLR driving up employer healthcare costs?

A piece of the Affordable Care Act that seeks to cap insurer profits may be driving employer healthcare costs in some cases.

The ACA’s Medical Loss Ratio intended to cap the profits of insurance companies by requiring them to pay out 80 percent of what they collect in premiums, leaving 20 percent for administrative costs, marketing and profit.

The reasoning behind this was to put eight out of every ten insurer dollars toward claims, as opposed to other parts of their business.

However, this also means the maximum profit insurers can collect is 20 percent of premiums. As a result, the avenue to profit growth is to increase premiums altogether, especially for those not surpassing the 80 percent threshold.

Employers are left to question whether insurers are best positioned to help employers lower medical claims, and what really drives annual premium increases of 10 percent, 15 percent, 20 percent or more.

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Tags: employee benefit adviser, employer digest, health insurance small employers, Self-Insured, self-insurance, self-funded, reference based pricing, network discount, Medical Loss Ratio, healthcare costs

What is an insurance network discount worth?

Posted by Emily Kubis on Wed, Apr 04, 2018 @ 09:04

Consider the value of insurance discounts

Some self-insured employers are adopting new strategies to pay for their group benefits plan. These plans, including direct contracting with hospitals or reference-based pricing, typically do not use a traditional insurance network.

Many employers are finding they can obtain better value for the services they pay for by either negotiating with the hospital directly, or by paying an excess of Medicare’s reimbursement rate.

Why would employers want to adopt these strategies? Generally, the benefit that insurers provide to employers are their network discounts for services. But with healthcare prices skyrocketing, are employers getting the most value through this set up? Let’s look at how it typically works. 

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Tags: employee benefit adviser, employer digest, health insurance small employers, Self-Insured, self-insurance, self-funded, reference based pricing, network discount

Self insurance on the rise

Posted by Emily Kubis on Wed, Mar 28, 2018 @ 06:03

Rising healthcare costs make self-insurance more attractive

A new study from Arthur J. Gallagher & Co. reports that self-insurance is on the rise across the employer spectrum, including lower midsize, upper midsize and large employers.

The rate of employers self-insuring has increased between 8 and 10 percent since 2016, the study found.

This trend is expected to continue as costs associated with traditional, fully-insured plans become prohibitively expensive, especially for small and midsize employers.

The big benefit of self-insurance is the savings potential. Because employers pay the claims, they reap the benefit of low-claim years. Additionally there are also blended options, where employers can take on less risk and still benefit in low-claim years while minimizing risk in high-claim years.

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Tags: employee benefit adviser, employer digest, health insurance small employers, Self-Insured, self-insurance, self-funded

How a 40-employee group saved $100,000 with reference-based pricing

Posted by Emily Kubis on Fri, Mar 23, 2018 @ 10:03

A more cost-effective way to pay for healthcare

Reference-based pricing is a new payment model for employer-sponsored healthcare. Through reference-based pricing, self-insured employers forgo the traditional insurance contract. Instead, employers pay employee claims directly to hospitals and providers, typically in excess of Medicare. In other words, employers pay the hospital 140 percent of what Medicare would reimburse for the same service.

This strategy can save employers thousands of dollars per year—below is a case study of one of our clients who saved $100,000 on premium and plan costs by transitioning to this strategy.

But why would an employer want to forgo the traditional insurance contract? A piece of the Affordable Care Act is the reason why.

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Tags: employee benefit adviser, employer digest, health insurance small employers, Self-Insured, self-insurance, self-funded, reference based pricing

Should my organization self-insure?

Posted by Emily Kubis on Fri, Feb 16, 2018 @ 09:02

Are these myths keeping you from self-insuring?

Just because your group plan has always been fully-insured doesn’t mean this is still the best strategy for your organization. While self-funding has traditionally been reserved for large groups, new solutions are available that make it possible for groups with even 20 employees to self-fund their benefits plan.

First, what is self-funding, or self-insuring?

The major difference between self-insured and fully-insured plans are in regards to who operates the plan, and who pays the claims. With self-funded insurance, the employer operates the plan and pays the claims. With fully-funded insurance, the insurance company operates the plan and pays the claims.

The big benefit of self-insurance is the savings potential. Because employers pay the claims, they reap the benefit of low-claim years. Additionally there are also blended options, where employers can take on less risk and still benefit in low-claim years while minimizing risk in high-claim years.

But many small employers remain wary. Are these self-insurance myths keeping you from considering alternate funding methods

These ideas commonly keep small employers from considering self-insured health plans, but they aren’t the roadblocks many employers think they are.

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Tags: employee benefit adviser, employer digest, health insurance small employers, Self-Insured, self-insurance, self-funded

What is self-insurance?

Posted by Emily Kubis on Mon, Jan 22, 2018 @ 07:01

What employers should know

What is a self-insured health plan? This is an alternative to a “fully-insured” health plan, and is another option employers have for funding their group health plan.

The major difference between self-insured and fully-insured plans are in regards to who operates the plan, and who pays the claims. With self-funded insurance, the employer operates the plan and pays the claims. With fully-funded insurance, the insurance company operates the plan and pays the claims.

The big benefit of self-insurance is the savings potential. Because employers pay the claims, they reap the benefit of low-claim years.

Employers might hear that they are responsible for claims and immediately balk at the idea of self-insuring. “What if we have a really bad month, or really bad year?” Typically, employers are responsible for claims up to a certain threshold, and they carry stop-loss insurance for claims that exceed that threshold. This reduces claims pressure in a self-funded plan.

So how does it work?

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Tags: employee benefit adviser, employer digest, health insurance small employers, employers, self-funding, self-funded, Self-Insured, self-insured lite

Should your benefits strategy include a Health Reimbursement Arrangement?

Posted by Emily Kubis on Wed, Nov 22, 2017 @ 09:11

Pros and cons of the ‘self-insured lite’ strategy

What is an HRA? A Health Reimbursement Arrangement is a tax-advantaged employer-sponsored account to reimburse employees for medical or insurance costs.

For small organizations with less than 50 employees, employers can reimburse for the cost of individual health insurance premiums. For larger employers, the accounts can be used to help employees pay for out-of-pocket medical costs.

One way to use an HRA alongside a group plan is a strategy Bernard Health calls “self-insured lite.” Under this strategy, the employer chooses the highest deductible plan, but reimburses employees for expenses incurred above a certain level.

For example, you double the deductible from $2,500 to $5,000, but reimburse employees for any dollar spent over $2,501 using an HRA. If you have high-utilizers, they’ll be protected from increased costs, while the employer avoids over-insuring their lower-utilizing employees.

Here are some pros and cons of the “Self-insured lite” strategy.

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Tags: employer digest, employer health benefits, employer health plans, health insurance premiums, Self-Insured, self-funded, self-insured lite

What is reference based pricing, and how does it benefit employers?

Posted by Emily Kubis on Thu, May 11, 2017 @ 11:05

Innovative payment approach gaining traction

One of the more revolutionary healthcare cost-containment efforts undertaken by some U.S. employers is “reference based pricing.” This option for self-funded employers seeks to limit costs by providing a fixed amount for certain healthcare services.

Reference based pricing is typically used for procedures with high cost variation but low quality variation, like joint replacement surgeries or certain medical tests.

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Tags: employer digest, employers, solutions for employers, Self-Insured, self-funded, self-funding, reference based pricing, value based pricing

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