One of the most costly line-item expenses for businesses is the cost of employee benefits. Efforts to control the sky rocketing premiums have caused business owners to jump on the insurance carrier carousel and shop their coverage annually. But employers are limited to small number of carriers such as Anthem Blue Cross, Aetna, Medical Mutual, and United Health, and Trustmark from which to obtain fully insured quotes.
At first glance, it may appear that there are many options to choose from but in reality, most plans are very similar. There are only minor differences in the plans offered by one carrier versus another. Often the differences lie in the deductible amounts and co-pays offered in the plan. Some carriers offer more preventative care and wellness benefits.
Most insurance carriers offer health care networks through preferred provider organizations (PPOs) or similar types of networks. The networks are designed to have pre-negotiated pricing for medical procedures and treatment which in turn will reduce the overall costs to health insurance carriers. By reducing health care costs, the carrier can charge less for insurance premiums. The bottom line is that if your employer group has a good year with regard to medical claims paid the insurance carrier keeps the profit. If you have a bad year then the employer will most likely experience a double digit increase at renewal.
So, what other options are available for employers? For employers with less than 25 employees enrolled in their plan there is really no other viable options. For employers with more than 25 employees enrolled, there are self-funded options. A self-funded plan gives the employer an opportunity to design their own plan with the features and benefits that fit their needs and budget. The plan is administered by a Third-Party Administrator (TPA). In the past it was believed that self-funded plans were only available for larger employers with hundreds of employees. That is no longer the case.
The term (self-funded) may lead some to believe that the employer assumes all the risk and can be financially at risk when there is a catastrophic health condition with one of its employees. In order to protect the employer the TPA will usually set up stop loss coverage. The stop loss amount will be determined and reviewed by the TPA, Broker and employer to make sure the employer is covered appropriately.
Self -funded health plans can provide employers with the ability to control health care costs by having transparency in the plan and claims which allows them to make educated decisions on how to control cost and create better health outcomes for their employees.
For more information regarding self-funded health care plans as well as fully insured plans you can contact Hamilton Insurance Group, Inc at 419-526-4700 or visit Hamiltongroupinc.com.
