Let’s start by describing what has become a common occurrence when it comes time to renew your group health insurance.
About 90 days prior to your renewal, you ask your broker if your renewal is ready to be released.
The answer is always not yet (even though the carrier absolutely knows the renewal rates at this point) but we should have it within a month. Thirty days later you receive your renewal and it comes with a 15% increase.
Your broker tells you he or she will “negotiate” better rates for you.
Your broker returns and says “I have good news, I got the carrier to agree to reduce the increase to 11% and if you would consider changing carriers, we can even get it to 8%! If you don’t want to switch carriers, we can make a few plan tweaks, a slight increase in deductibles and co-pays and maybe add a High Deductible Plan option and we can still get it to 8% keeping the current carrier in place. That would require much less work on your part”.
By now I’m sure you get the picture and are saying “what the H*#L is the big secret?
The secret is: YOU ARE THE INSURANCE COMPANY!!
The very definition of insurance involves a transfer of risk to a 3’d party, in this case your insurance carrier.
But let’s think for a minute, if you have over 50 employees on your company health insurance plan, you are rated on your claims experience.
If the carrier hasn’t met the profit margin they projected for your group, they simply get their money back in the form of a premium increase.
Mission accomplished, all risk transferred to you!!
This is the inverse definition of insurance.
In all group health plans, whether fully insured (that’s a no-no at Andus) or self-insured, there are good years, normal years, and bad years.
How is it possible that the cost goes up every year? You’ve never had a good year?
When pressed for answers, carriers and brokers provide the standard company lines like medical trend and a few high claimants but the reality is most of the time the answers you’re given are nonsense.
You would be shocked to learn that what they are telling you is a bad year and abnormally high claims, may in fact be “normal” given a group of your size.
The problem is that you do not have the tools or information to know what good years, normal years, and bad years look like.
This information is proprietary to the carriers and they will go to great length to keep you in the dark and achieve their ultimate goal — Transfer All Risk to You!!
At Andus, we are passionate about helping employers take control of the process of procuring health insurance.
We have a proven process to help you tackle these issues.
We are here to help and welcome your calls and questions. Stay tuned for future articles.