Column: ‘Tis the season to shop for a medical plan

By Bill Fallon

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BY CHRIS PECK

Now is the time for many businesses to renew their medical plans, and it’s safe to say many have not kept current with the health insurance landscape. Now, they’ll need to pay attention.

In the world of health care, the private sector is constantly evolving due to ever-escalating costs and the intense regulatory environment. The common denominator for businesses of all sizes is they will be forced to explore solutions they may not have considered in the past in order to gain cost control while offering competitive benefits packages to employees. Here’s what your business can expect in the coming year.

Businesses with fewer than 100 enrolled employees

Chris Peck Chris Peck

Aside from the individual marketplace, where the insured have experienced perhaps the most change in plans, rates, networks of providers and the overall shopping experience, the most change in group health insurance has been in the market of two to 100 enrolled employees. With most plans increasing premiums by 10 to 20 percent, businesses will be forced to consider options that may have seemed too risky in past.

One such option is level funding, and it’s worth considering for employers who hope to achieve financial predictability and gain control over future medical costs amid the dramatic escalation of employee health care costs. Level funding has similarities to a fully insured plan, but it offers these advantages of a self-insured plan:

• Assurance of fixed monthly premium payments.
• Transparency on claims to understand cost factors and justification of renewal rates.
• Reduced state premium taxes.
• Option to exclude state-mandated benefits.
• Flexibility in plan designs.
• Potential for return of excess premium, received as a credit in the following plan year.
• No additional claims liability or cost if claims run poorly or if employer terminates the contract.

Businesses with 100-1,000 enrolled employees

Employers in this size market must decide the level at which they will engage their employees. With little or no engagement, businesses will be subject to whatever claims occur within their group. Thus, most companies are taking a proactive approach to controlling costs by engaging their employee populations; the most common way to do this is through a wellness program.

While proving the return on investment is near impossible, most companies in this category simply choose to believe sustaining a healthier workforce will yield a more productive workforce. They focus on driving down risk factors, which cause the majority of claims costs, using base lines such as health risk assessments and biometric screenings. ROI ratios can range from 2-to-1 to 5-to-1. For example, if a company spends $10,000 on a wellness program, they will see a benefit of $20,000 to $50,000 inside of 36 to 60 months.

Innovation in the 100 to 1,000 enrolled employees market is happening in the form of indemnity plans, which have the potential to make a slow comeback.

Using a self-insured platform, this type of plan does not use a network but rather a third-party administrator to negotiate payments with providers as claims are submitted. The standard reimbursement rate within this plan is Medicare plus 30 percent. The downside is businesses will not be able to offer name-brand carriers; the upside is they will be able to stretch the health care dollar further. This concept is fairly new to the market and it remains to be seen how receptive employers will be to adopting it.

Businesses with more than 1,000 enrolled employees

Within this space, health insurance is essentially business as usual. Of course, businesses must act to ensure compliance with the Affordable Care Act; but in terms of shopping for and evaluating various medical plan solutions, not much has changed. However, larger firms have adopted or are planning to adopt newer strategies such as telemedicine and private exchanges.

Chris Peck is CEO of Stamford-based CBP, a privately owned, midsize consulting firm founded in 1996. CBP also maintains offices in Fairfield and Plantsville in Connecticut and in New Jersey and New York. Peck can be reached at 203-487-0604 or cpeck@cbp.com.

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About the author

Bill Fallon
Bill Fallon is editor of the Fairfield County Business Journal. He has worked at Westfair Communications for more than five years, previously editing an upstate New York daily and a national motorcycle magazine in Nevada. He attended Iona Prep in New Rochelle, N.Y., and the University of Virginia.
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