The employee benefits landscape has become increasingly complex in recent years. One of the main driving factors in recent years has been the development of new specialty drugs that have little competition. While these can be lifesaving/changing drugs, they can cost health plans up to $20,000 per month. With what seems like ever increasing premiums for less and less coverage, employers are being forced to explore innovative strategies to attract and retain top talent. This is certainly true of larger employers who have more employees to “spread” out their risk and self-fund their programs with more employees, but what are small employers supposed to do?
Since the ACA was signed into law in 2010, health insurance carriers are no longer able to underwrite small group health plans. This was created with pure intentions but has had adverse effects on healthcare premiums and ultimately transparency in the industry. The idea behind no underwriting is that people with pre-existing conditions are not discriminated against or denied coverage. However, small employers (under 50 employees) are no longer able to see claim information or receive loss ratios. Rather, their premiums are all age based and determined by the zip code of the employer. This is very frustrating for employers as they have little to no control over one of their largest expenses.
So, what options do small employers have? We have seen many employers shift costs to employees and raise deductibles but at some point, enough must be enough. Employers don’t like doing it and employees obviously don’t enjoy receiving it. Others have looked to different funding options such as qualified high deductible health plans that can be paired with a health savings account. This is a good option for many but for others can cause even more financial strain. Instead of paying a copay for a doctor visit or prescription fill, you instead are paying the full cost until your deductible is met. The idea being what you save in premium dollars, you can place into an HSA and use that to fund your healthcare expenses.
If you think about it, in some cases we pay more for a haircut or an oil change than we do to go see our primary care physician. We don’t buy insurance for haircuts and oil changes so why do we pay for a $25 copay?
Other employers are looking to level-funding strategies to combat rising costs. Simply put, level-funding allows for carriers to underwrite individual groups. This can be a great option for some groups and not at all competitive for others. Level-funding gives more information and control back to employers. Along with underwritten rates, employers receive detailed claim information and the opportunity to get a refund back at the end of the year if they have a good claims year. Reach out to the Accel Benefits team if you are interested in learning more.
At Accel, we take the approach as your advisor to make you aware of the insurance market with monthly updates and new strategies employers are trying. We want to arm you as the employer with the information necessary to make educated decisions that will positively affect the bottom line of your business. We enjoy getting innovative and thinking outside of the norm to find solutions that fit each individual client’s specific needs.
Written by: Jared Deines