Where to start when choosing a group health plan
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1. What is my budget?
Businesses should look at a few factors when choosing a health plan such as strength of network, and premium costs versus the underlying plan design (POS, EPO, PPO for example). As we are now seeing much more consumer-directed plans it is important to also weight technology and tools from a sponsoring health insurance carrier and the broker through which you purchase. Many brokers are able to do a good job if you have 100 employees though with their margins being pressured the employers with less staff suffer. We specialize in this under-served market from the position of added services. It is always important to see what your budget is and then try to massage a carrier and product to fit your needs.
2. How do I structure Employer – Employee contributions?
Normally a business subsidizes the cost of group health insurance for its employees, and most carriers will require a 50% subsidy in order to underwrite group coverage. That national average normally falls around a 70% employer subsidy, thus leaving a 30% monthly contribution by employees. This is just the national average. We have many calculating tools that all of our clients are able to use at Health Insurance Geeks.
3. Can I offer more than one plan?
Many carriers will enable a small business to sponsor 2 plan designs, though it is becoming difficult for employer’s with less than 5 or 10 employees. Some insurance carriers will require 10 or more enrolling employees to tailor an offering with multiple products. As such, an employer could then offer a core and buy-up option (higher cost, more flexible plan) for the employees. In addition, with this type of structure employees pay a larger monthly premium contribution for the more expensive product….pay for what you get.
4. Are my rates fixed for a year?
Yes, all group health plans have a 12 month premium contract period. Therefore, you will only deal with a premium increase or decrease upon your annual renewal. PPO plans are increasing at an alarming double digit rate and have for 10 years…consumer-directed health plans however seem to be working. We have seen mid-single digit increases in 2011.
5. If we select a plan we want to change in 6 months can we?
Normally no. If you select a group plan, you normally can’t make any changes to the employer-sponsored product until your annual renewal. In addition the selection employees make are not to change until the annual open enrollment period (annual renewal period). There are exceptions for employees to make plan changes, per IRS code section 125 and life/event status changes such as adoption, marriage, divorce, death of a spouse, termination of employment, birth of a child. In addition some carriers will allow an off-cycle change to the plan designs for “premium hardships” though we always recommend a broker like Health Insurance Geeks who specializes in this area and does many transactions like this annually. As such the process is quite streamlined. Also, many brokers will pressure you not to do this as their commissions will suffer. If you have questions about your broker’s motives ask how much he or she earns annually and what you are getting for that compensation.
6. Customer service of the insurance carrier and broker
In most states in the US, small group plans’ prices (2-49 employees) are regulated and fixed by the underlying state insurance department. So if you purchase from an insurance carrier or broker, you pay the same cost by law. So regarding customer service, you want 2 strong layers – a great small group broker (www.healthinsurancegeeks.com) and a health plan dedicated to a good customer experience (United Healthcare, Cigna, Aetna, Wellpoint, Health Net, Anthem are some examples). As employer size grows over 50 employees and in to the hundreds there are additional third-party administrators and vendors we can utilize at the Geeks and we also utilize many of our proprietary brands and tools from our middle market platform Nexus Benefits (www.nexusbenefits.com).
7. Which plans are the best for the price?
In this market in 2011, either an HRA (health reimbursement arrangement) or an EPO plan design give the most powerful product for the price. PPO and POS plans continue to be priced well above EPO and HRA products, and HMO plans are not priced well below as in the previous 10-20 years. H.S.A’s (health savings accounts) are also priced well in some markets with some carriers, but not across the board. You can check and compare all of these options and benefits from our “compare your broker” section in Nexus Benefits.
8. How much lead time do we need to start a plan
It is always recommended that a selection and all group paperwork be provided to the underwriting team at the insurance carrier at least 2 full weeks prior to the effective date of coverage. For example, for a September 1st effective date, all applications should received by the sponsoring insurance carrier no later than August 15th.
9. How do I know whether my broker is good, and competent or driving my price up to earn commissions?
Boy this is our easiest question yet. If your broker is not pounding the table to do things differently now in 2011 than purchasing and overpaying for a “copay-based” plan, call the Health Insurance Geeks immediately. Normally we run in to scenarios like this where we deliver 50% in premium savings and actually make your product better.
10. I have a unique employee base that requires unique thinking and servicing. Do certain brokers or carriers cater to us?
Absolutely. Though health insurance carriers do not necessarily cater to certain industries, from an underwriting perspective they like some and penalize some within their rate models. That said from a brokerage standpoint, we find ourselves without many competitors in our type of space. As such we really flourish with fast growing companies that understand and harness the power of social medial, internet technology and communication systems that create a virtual platform. We also especially enjoy working with clients who are looking for a fresh start, and new fresh ideas.
11. Should I shop brokers and give my information to several to get prices?
NO! This is one of the things that we see clients do which is a complete waste of their time and the brokers/carriers as well. Insurance is not like buying a car though most people would rather do that than purchase insurance from a slimy insurance salesman. As such, it is your job to interview brokers and their services and references and then select 1 to go to market for you and represent you. Insurance carrier’s first question to a broker is whether he or she is the broker on the account, and if the answer is yes, you get the “best” look….if the answer is “no” the insurance carrier normally feels they are wasting their time and the brokers. All brokers working on employer’s with less than 100 employees should be able to deliver the same product. Once claims experience is involved in underwriting (larger than 100 employees) the game changes, and the Geeks again flourish. We are all former underwriters, so challenging an insurance carrier for our clients is quite easy and the norm here.
That is where we are miles apart from our competition….we are smart, articulate, well-studied, and vastly different than the stereotypical insurance salesman.
