Recently I wrote an article about the Four BIG reasons why you should evaluate your health insurance plan 2021. If you haven’t read it, you really should because the Tail Of The Dragon is going to swing significantly into your 2021 and 2022 budget.
So how does one actually evaluate your health insurance? Would you be looking at the actual benefits that are offered to employees, or the cost to your organization? These are two totally distinct and different evaluations. For sake of this discussion, I’m going to focus on your costs rather than be judgmental about the benefits that you offer employees – so let’s assume you keep the same benefits that you have currently.
The financial evaluation shouldn’t be one that is complicated, perceived to be complicated, or told it is complicated – is relatively simple. If you read my articles you know that I am a big proponent of partially self-funded plans, regardless of your size. Partial self-funding affords you the ability to pay claims as they’re incurred – if and when they happen at all – instead of prepaying all those premiums to an insurance company and giving them the benefit of cash flow.
Here are the simple steps:
- Gather the last two years of medical and pharmaceutical claims data – the more detail the better – but at a minimum month-to-month paid claims along with month-to-month enrollment, along with any high cost claim reports if available. If facility claims can be broken out and separated from professional (physician) claims that is best. (I can gather this for you, with your permission of course)
- Assemble a census of those who are on the plan – gender, age or date of birth, and the type of coverage they are selecting: single, employee/spouse, employee/children, or family along with the plan they’ve elected if you offer more than one.
- Gather the Plan Documents, Summary Plan Description (SPD), or Summary of Benefit Coverage (SBC) of the insurance offered (I can gather this too).
- Lastly, pull together your Administration Service Agreement from your administrator and any stop loss contracts you may have for the last 2 years (I can get this too for you).
Once this information is complete, the exercise is to reprice the existing medical and pharmaceutical claims with other vendors. The selection of vendors should be vetted in advance and the criteria for the repricing exercise is critical. You don’t want “blanket assumptions” made with other general data – you want repricing completed on your claims data.
Your medical and pharmaceutical claims are the biggest cost of your health insurance budget. It’s not the cost of administration or stop loss, therefore a determination of the amount of savings will dictate whether or not to consider change. The amount of savings also has to be compelling – not just several percentage points – and you can be the judge of what’s compelling.
If you want to take the steps to be prepared for your next renewal, be proactive and have this evaluation exercise completed well in advance so you can chart your course and plan accordingly for next steps. I’d be delighted to assist you in this exercise at no cost or obligation. I simply want to show you what is possible, and alternatives that you’ve probably never seen before (for a variety of reasons).
If you’d like to explore this further, please call me at 970.349.7707 or email me at email@example.com. Stay healthy.