Another Health Insurance Rate Hike? Take These Next Steps
New year, new rate increases for small group health insurance. What’s new, right? For years now, small businesses have faced rising health insurance premium costs. While the rate of increase has slowed, it is still outpacing inflation, according to Mercer’s 2018 National Survey of Employer-Sponsored Health Plans.
At XMI, we’ve seen our clients’ rates increase anywhere from 5 to more than 25 percent. Are you feeling the pinch after this year’s increase? Lisa McMurtry, director of benefits for XMI, recommends these next steps.
Step One: Consider a Different Health Insurance Plan
The Mercer survey breaks down between premium increases for employers who do nothing and those who make a plan change, and the difference is noticeable. In 2018, for example, employers who simply renewed their current plan saw a 6.2 percent increase. Those who made a plan change managed to whittle that down to 4.2 percent.
Raising the deductible is often the first line of defense against rising health insurance rates. Forty-two percent of small firms now have deductibles that are more than $2,000 for single coverage, according to the Kaiser Family Foundation 2018 Employer Health Benefits Survey.
Another way employers are responding to rising health insurance rates is by offering so-called dual option plans. The employer funds a base option, usually a high-deductible health plan, and also offers employees the option to “buy-up” to a richer co-pay plan.
Meanwhile, self-insurance can be a viable option for small employers with a younger, healthier workforce. With self-insurance, companies pay the actual claims themselves, usually supplementing a plan with stop-loss insurance to help cover unusually large claims.
Despite low enrollment, SHOP, or Small Business Health Options Program, remains an option for businesses with 50 or fewer employees. Beginning last year, small employers offering coverage through SHOP no longer purchase through Healthcare.gov, but instead work through a broker or insurance carrier. Some businesses still qualify for the Small Business Health Care Tax Credit as well.
Employers could also bide their time for the long-awaited association health plans, which would allow small businesses within the same industry to band together to purchase group health insurance. A Department of Labor regulation is set to make these plans a reality later this year, but resistance from states might delay this option.
Step Two: Help Employees Shoulder the Cost
High deductibles may mean lower premiums, but they also mean higher out-of-pocket costs for your employees. To alleviate some of these cost pressures associated with high deductibles, many employees are attaching a health reimbursement arrangement (HRA) to employee plans.
“This pays a portion of the employee’s deductible to help mitigate their exposure,” McMurtry says. “Plus, the HRA can be structured to pay first dollar, last dollar or even sandwiched in the middle.”
Employers can also open and fund tax-free health savings accounts for employees and even offer pre-paid vouchers for low-level healthcare services like routine blood tests and MRIs.
Step Three: Fix the Cost of Healthcare
Wellness initiatives and “creating a culture of health” are also gaining in popularity, according to the Mercer study.
- 63 percent of respondents provide healthy food choices in cafeterias and meetings
- 57 percent prohibit smoking on the work campus
- 33 percent provide onsite fitness facilities
- 54 percent provide a range of technology-based resources to engage employees in caring for their health and fitness.
Not all of these are viable solutions for smaller employers but making every effort to create a culture of health is a smart thing to do. “Wellness initiatives offer multiple benefits to employers and employees,” McMurtry says. “Keeping employees happy and healthy will eventually lower the cost of healthcare along with increasing attendance and therefore productivity.”
Due to questions around privacy, small firms are much less likely than large firms to offer incentives for participation in wellness programs, which can decrease their effectiveness.
Employers are also viewing solutions like employee education and cost comparison tools as a way to steer employees away from unnecessarily expensive healthcare services.
“The cost of healthcare plays a huge role in our benefits discussions with clients,” McMurtry says. “Because the truth is, until we fix the cost of healthcare, we cannot begin to fix the cost of health insurance.”
Questions about your benefits? Let XMI be your guide. We can help you understand your options to maximize value for your company and employees. Contact us at 615-248-9255 or submit your question online.