Group Health Insurance
Almost every business is overpaying for employee health benefits – including yours.
Medical benefits, workers comp and unemployment insurance rates are out of control. Not to mention, risks surrounding HR, compliance, and government regulation have increased dramatically.
Aliere Advisors helps smart businesses navigate the new landscape of HR administration and employee benefits. We work with companies to develop a customized HR Strategy to reduce the cost of employee health benefits and eliminate employment-related liabilities. Loyal employees are your biggest asset, and sometimes your biggest risk.
Every business needs a solid employment strategy. One that will protect the business, the employees, and the profits. That’s what we do best…
Once we agree on a new strategy, we help you execute, step-by-step. We fight on your behalf to get the best rates from the most qualified vendors.This way you can stay focused on growth and not chasing quotes. We do all work for you. We gather and analyze each vendor’s proposal. We breakdown the numbers, review the costs, and comment on proposals. And finally, we help you select the best one for your success.
Is health care reform eating away your profits? If you don’t find a better solution quickly, it’s going to get even worse. Increasing premiums, higher co-pays, larger deductibles, and coverage limitations are the new normal.
Stop cringing every time your insurance agent calls. It’s not their fault. Most insurance agents are powerless when it comes to getting you better rates under the new Affordable Care Act. They have to present you with rate increases because they have nothing else to offer. Don’t settle for increasing the employee’s costs or moving them to a cheap restricted network.
The way to fight back against rising costs is to look beyond the open market fully insured health plans and consider alternative solutions like a level self-funded health plan administered by a third party administrator. They can help owners save thousands with no compromise or reduction in benefits.
Group Health Insurance Misconceptions
Outlined below are common misconceptions regarding level funding versus captive arrangements and traditional health insurer offerings:
1.) Fixed costs may be too high: Generally speaking, the fewer enrolled employees a group has, the higher their fixed costs, whether the group is level-funded, traditionally self-funded, within a captive, etc. Furthermore, health plans offered by traditional insurance carriers like Blue Cross, Aetna, United Healthcare, Cigna, etc. tend to have higher fixed costs, while health plans offered by privately held third party administrators tend to have lower fixed costs. Captives may argue that they offer slightly less expensive stop loss premiums, but the trade-off is that employers need to put up collateral (often equal to about 15% of projected first year costs,) just to get into the captive AND captives pool their stop-loss, which is potentially beneficial to less desirable risk, (unhealthy companies,) though, detrimental to more desirable risk, (healthier companies).
2.) Offer minimal credit back to employers: Level-funded health plans offered by traditional insurance carriers like Blue Cross, Aetna, United Healthcare, Cigna, etc. tend to retain a portion of the claim surplus when clients renew, though, usually always retain 100% of the surplus in the event of termination. Level-funded health plans offered by privately-held third party administrators usually provide a refund of 100% of the unused claim surplus back to the employer whether the client renews or terminates their relationship with the third party administrator.
3.) Offer limited plan design flexibility or control over other service providers: Level-funded health plans offered by traditional insurance carriers like Blue Cross, Aetna, United Healthcare, Cigna, etc. tend to restrict employers to certain plan designs and only allow the employer to use the ancillary service providers associated with that insurance company. Level-funded health plans offered by privately held third party administrators tend to offer complete plan design flexibility and customization coupled with the ability to utilize any outside vendors the employer would like to hire.
4.) Employer assumes the risk of monthly / annual claim variance / volatility: By definition, a level-funded health plan is a partially self-funded health plan that removes the claim volatility typically associated with traditional self-funding. This is accomplished through the inclusion of 2 types of stop-loss insurance; specific stop-loss and aggregate stop-loss. Most level-funded health plans require the employer to pay the maximum annual costs that are possible, (as defined by the protections offered by the stop-loss insurance). These maximum annual costs are broken down into monthly payments and further broken down into traditional 4 tier premium equivalent rates for purposes of building appropriate employee contribution strategies. Each monthly payment is composed of stop-loss premium, administrative fees, and claims, (based on the stop-loss projections). At the end of the contract term, if there is any claim money left over, the surpluses are awarded back to the employer. If actual paid claims exceed the projections made by the stop-loss carrier, those excess claims are paid by the stop-loss carrier, not the employer.
5.) Costs to exit or renew can be expensive. Some level-funded health plans offered by the traditional insurance companies like Blue Cross, Aetna, United Healthcare, Cigna, etc. do not include the cost of termination administrative fees or stop loss premium within their level-funded costs, although most do. As mentioned above, most of these plans will also retain 100% of any unused claim surplus in the event of termination. Most level-funded plans offered by privately held third party administrators do not charge any termination fees nor do they retain any of the claims surplus, even in the event of termination.
Bottom line: Level-funded health plans offered by the traditional insurance carriers have distinct disadvantages versus level-funded health plans offered by privately held third party administrators.
A properly designed level funded health plan offered by a flexible privately held third party administrator can be a very effective way for healthier employers to reduce healthcare costs versus the traditional fully-insured market, self-funded market, or captive marketplace.