New year, new rate increases for small group health insurance. What’s new, right?
For years now, small businesses have seen their health insurance premiums skyrocket. And 2018 is no different. At XMI, we’ve seen our clients’ rates increase anywhere from 8 to 28 percent.
Are you feeling the pinch after opening your renewal notice? Lisa McMurtry, director of benefits for XMI, recommends these next steps.
Step One: Consider a Different Health Insurance Plan
Raising the deductible is often the first line of defense against rising health insurance rates. Thirty-seven percent of small firms now have deductibles that are more than $2,000 for single coverage, according to the Kaiser Family Foundation 2017 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. New for 2018, small employers offering coverage through SHOP would no longer purchase through Healthcare.gov, but would instead work through a broker or insurance carrier. Some businesses will still qualify for the Small Business Health Care Tax Credit as well.
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 are also gaining in popularity. According to the Kaiser study, 58 percent of small firms (and 85 percent of large ones) offer a wellness program in at least one of these areas: smoking cessation, weight management, behavioral or lifestyle coaching.
“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, however, 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 are standing by to help you understand your plan and learn how to maximize value for your company and employees. Contact us at 615-248-9255 or submit your question online.