Navigating the labyrinth of group healthcare costs can be as daunting as it is crucial. For businesses, providing healthcare benefits is a significant investment, but what exactly are you paying for? Let’s demystify the components of group healthcare costs, offering a clearer perspective for business owners and HR professionals alike. The Anatomy of Group Healthcare Costs Understanding the breakdown of healthcare costs can empower you to make informed decisions and potentially identify areas where savings can be achieved. Here’s what makes up the bulk of your group healthcare plan expenses: 1. Premiums: The Core Expense Premiums are the most apparent cost associated with healthcare plans. They are payments made to insurance companies to cover the cost of health benefits for employees. Premiums can vary widely depending on the plan’s coverage level, the insurer, and the demographic makeup of your employee group. 2. Deductibles: The Initial Outlay Deductibles are the amounts that employees must pay out of pocket before the insurance company starts to pay its share. A plan with a lower premium might have a higher deductible, which can be a double-edged sword, offering savings for the company but potentially leading to higher out-of-pocket costs for employees. 3. Co-payments and Coinsurance: The Shared Costs Co-payments are fixed amounts that employees pay for specific services, such as a doctor’s visit or medication. Coinsurance, on the other hand, is a percentage of the cost of a service that the employee pays after meeting the deductible. These costs encourage judicious use of medical services and ensure that employees share the expense burden. 4. Networks and Out-of-Network Costs The distinction between in-network and out-of-network providers can significantly impact costs. In-network providers have agreed to negotiated rates with the insurance company, whereas out-of-network services typically come at a higher cost, with a greater portion falling on the employee. 5. Benefits and Coverage Limits The scope of services covered, from preventive care to specialist treatments, influences costs. Plans with more comprehensive coverage or higher coverage limits will generally be more expensive. Understanding the trade-offs between breadth of coverage and cost is key to selecting the right plan. Why It Matters Why should businesses care about understanding these costs? Here are a couple of compelling reasons:...
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When evaluating the role of your health benefits broker in assisting with employer group health insurance, consider asking the following questions to ensure they are effectively supporting your organization’s needs: Expertise and Guidance: Does your broker provide clear, informed guidance on the various health insurance options available? Are they up-to-date with the latest market trends and regulations Assessment of Needs: Is your broker diligent in assessing your company’s specific health insurance needs and budgetary constraints? Do they tailor their recommendations to align with your organization’s goals and workforce requirements? Plan Comparison and Selection: Does your broker present a comprehensive comparison of different health insurance plans? Do they explain the benefits, costs, and features of each option to help you make an informed decision? Enrollment Process: Does your broker facilitate a smooth enrollment process? Are they proactive in ensuring that your employees understand their benefits and are enrolled correctly in the chosen plan? Ongoing Support and Service: Does your broker offer ongoing support after the enrollment process? Are they accessible and responsive to any questions or issues that arise throughout the plan year? Renewal and Plan Adjustments: Does your broker assist with the annual review of your health insurance plan? Do they provide insights on plan performance and recommend adjustments or new options to ensure the plan remains competitive and meets your evolving needs? Compliance and Regulation Assistance: Is your broker knowledgeable about the latest health insurance laws and regulations? Do they help ensure that your plan is compliant and inform you of your legal obligations and any changes that might affect your coverage? Asking these questions can help you determine whether your broker is playing an effective role in managing your employer group health insurance, ensuring that your organization and employees benefit from the best possible coverage and support. What Should I Ask if I am Considering a New Health Benefits Broker? When assessing the potential fit of other brokers, employers should consider several additional factors to ensure they select a broker who aligns with their company’s values, needs, and expectations. Here are some key aspects to guide employers in selecting the right broker: Reputation and Experience: Research the broker’s reputation in the industry. How long have they been...
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It is no secret that overall, healthcare costs are rising, in a climate where employees are looking for more and more from their benefits offerings. For employers it is a constant challenge to provide a robust package that will help with the goal of attraction and retention of talent, while also trying to control costs. Reference based pricing health plans have become increasingly popular in recent years as employers look for ways to contain those rising healthcare costs. Reference based pricing is a type of health plan that sets a maximum allowable fee for certain procedures, tests, and services. While this can indeed be an effective way to control costs, there are pros and cons to consider before deciding if it’s the right choice for your company. PROS Cost Control. The primary benefit of reference-based pricing is that it helps employers control healthcare costs. By placing a limit on what providers can charge for certain services, employers can ensure that their employees are only paying for the care that they need. Transparency. Reference-based pricing can be more transparent for employers, as they can easily see what they are paying for each service. This allows employers to make informed decisions when deciding which services to cover. Create Competition Among Providers. Since providers must compete for the business they must offer services at or below the reference fee in order to be considered for payment. This encourages competition and helps to keep prices reasonable. Employee Choice. Since employers are only paying a set fee for a service, employees can choose from any provider that meets the reference fee. This allows employees to find a provider that best meets their needs and budget. CONS Limited Availability of Certain Services. Since providers are limited in what they can charge, they may be less likely to accept patients who are covered by these plans. This means that patients may have to travel further to find care or may be unable to access certain services. Administrative Burden. Employers must constantly monitor and adjust the prices they are paying for each service. While it is not for everyone in all situations, all in all, reference-based pricing is a great way for employers to control...
Read MoreGetting Ready for Winter- Developing Your Inclement Weather Policy By Maggie Johnson Winter will soon be here with all of the snowstorms, blizzards, and freezing weather that come with the season. Keeping a business running effectively during harsh weather can be challenging, but having an inclement weather policy can provide guidelines to employees about when they are expected to report to work and how they will be paid when stormy weather hits. Here are some things to consider when creating your inclement weather policy: Notifying Employees These days, we often receive accurate, advance weather reports. This allows us to plan if there is a predicted storm. Even though we are informed by various news media, it is advisable for employers to have an established notification system for employees to know whether the company will close or if there will be a delayed opening. One way to advise employees is to implement a Weather Hotline. This can simply be a specialized phone number or extension that employees call to find out when and if they should report to work. Paying Employees Under federal law, employers are only obligated to pay their hourly (non-exempt) employees for actual hours worked. NOTE: There are certain states (i.e., New York, California, New Jersey, Rhode Island, Massachusetts, Connecticut, Washington, DC, New Hampshire and Oregon) that require non-exempt employees to be paid a certain minimum amount if they report to work as scheduled, and then are sent home, before work actually is performed or started. It’s important to be familiar with your state law. However, many employers go beyond federal and state pay requirements and pay employees for the time between normal start time and a delayed opening or up to a certain number of hours or even for an entire day when it’s storming outside. Usually, there are a few rules that go along with this. For example, if the company gives notice of a delayed opening, but an employee doesn’t report to work at all for the day, that employee will not receive the benefit of pay. Although the employee may be paid from his or her accrued vacation or paid time off balance. In accordance with the federal Fair Labor Standards...
Read MorePlanning for Open Enrollment By Maggie Johnson As we go into the fall, most companies will begin the process for Open Enrollment. Open Enrollment for many employers will be held in November and sometimes into December of 2019 for the 2020 plan year. To ensure your Open Enrollment goes smoothly, here are some suggested tips. Employee’s Share of Premium Most employees share the cost of the premium for health insurance coverage with their employer. For 2020, it is predicted by the Mercer National Survey of Employer-Sponsored Health Plans that the total health benefits costs per employee will increase by 3.9%. According to AON Consultancy’s 2020 Global Medical Trend Rates Report, healthcare benefit cost is expected to rise by 6.5% in the US. However, whether a health insurance plan is self-insured or fully-insured, the company’s claims experience is normally reflected in that company’s healthcare premium rates, and may be less or greater than the aforementioned predicted 2020 healthcare cost increases. Therefore, if your employees are facing a considerable increase in their healthcare premium contribution, you might consider mitigating that increase by taking on more of the premium cost share by your company, or implementing a salary-banded contribution system, so that lower-paid employees pay less than managers and highly-compensated executives. One of the biggest complaints made by employees is that their annual wage increase is not in alignment with the premium contribution cost increase for healthcare coverage, and they fall further behind financially each year. Regardless of your decision, it is always best to communicate to your employees about any upcoming premium increase early, preferably before Open Enrollment begins, and the reasons for the cost increase. Help Your Employees to Make Informed Choices Many employees are inclined to make the same benefit election as they made in the previous year. However, this may not be the best current choice for themselves and their families. It is important to provide them with education about each of your benefit plan offerings, so they can choose the best one for their particular situation. Education may be provided in Open Enrollment in-person meetings with representatives from your insurance carrier and/or your insurance broker, or through online education tools. In your written materials, such...
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