What insurance companies don’t want you to know
Most small businesses can cut 10% – 40% off the cost of their group health plan. They just don’t know how. Let us explain some little known secrets that could cut your company’s health plan costs immediately and keep costs low for years to come. These are secrets that insurance companies would rather you didn’t know because when you save, it generally costs them money. However, this report was written for you. So, get ready to save.
How healthy are your employees?
Your employees are probably a lot healthier than you think they are. How do we know? Just look at the averages that have been used by insurance companies for years.
Given any group of 10 or more people:
- 5% – 10% of the group will have serious or chronically expensive medical problems
- 35% – will have moderate medical expenses (up to $1,500 per year)
- 50% – 65% will either not use their plan or use it infrequently
In our medical care system we seem to focus on the high users of medical care and their cost impact on the system. That’s reasonable if you’re an insurance company. However, it’s predictable that in your group there are many more people who are relatively healthy than who are very sick.
That leads us to our first “secret” savings tip.
Secret #1: Insure the big claims and pay the small claims out of pocket
Sounds simple. Like the advice you’ve always received on auto insurance. And… it works. However, most employers are afraid to look at the obvious advantages of insuring their employees’ big claims and paying the small claims out of pocket. There’s actually a simple and safe way to do just that.
What we mean by “big claims” is hospitalizations and surgeries, expensive medications and testing procedures. By “small claims” we mean occasional doctor visits, minor tests and limited outpatient prescriptions. Believe it or not, you can now purchase health insurance to handle just your big, expensive claims and pay your small claims out-of-pocket. The resulting savings are substantial. When any group moves from a very high benefit plan (one that pays for most small claims) to insuring only their large claims, premium rates will normally drop by 20% – 50%.
The overwhelming majority of groups will save so much money in premiums that they can afford to pay the cost of any small claims for their employees and still pocket 10% – 40% in savings.
Typically, the numbers might look like this:
Current Health Plan Premium $320,000
High Claim Health Plan Premium $150,000
Instant premium savings $170,000
Cost of Small Claims and Administration $ 90,000
Net Savings (compared to Current Plan) $ 80,000
Secret #2: Paying your own small claims is simple, easy and inexpensive
You may be thinking; even if we save a lot of money, I don’t want to pay my own claims. I’m in the (fill in the blank) business not the insurance business. Relax. Claim administration services are available easily and inexpensively. Over the last 15 years, companies that specialize in small group health claim payment have offered claim services to assist companies just like yours. These companies coordinate with your health insurer (the one paying your BIG claims) to provide payment services for small claims and prescription costs. You save money without the administrative hassle.
Secret #3: You can save more money with a Wellness Plan
Most small employers think that Wellness Plans are just for big businesses. That used to be true. But now, small employers who use Secrets #1 and #2 are finding that they can save even more money by helping their employees lead healthier lives. The savings come from three sources:
- Small claims tend to go down in companies with Wellness Programs. Since you’re now paying your own small claims, when health plan costs go down you save money.
- Healthier employees are more productive. Sick days and absenteeism are reduced. Productivity rises, employee satisfaction increases and employee turnover can be reduced.
- Some groups are able to negotiate better rates with their health insurance carrier based on participation in a Wellness Plan. The new health care law even allows for these discounts.
- Your company may even qualify for one of the Wellness Plan establishment grants in the new health care law.
Secret #4: Customizing your health plan design can save you even more
Most insurers are working with outdated information and ideas. They worry (a lot) about employees over-using their health plans. They fret about plan participants using the Emergency Room for their family doctor and getting unnecessary tests. However, our experience, with scores of small businesses, tells us something very different. Your employees don’t want to be sick. They don’t want to waste time at a doctor’s office, they don’t want to lose time from work and they really don’t want to set foot in an emergency room. You can take advantage of your health-minded work force to cut your health plan costs.
But just in case… remember that when you self-insure small claims, you make the rules. You can design your plan to prevent over-use. Having employees pay a small part of the cost of care, even 10% – 20% can assure that no one views their medical plan as a “blank check”. You can design your plan to discourage unnecessary ER use and encourage second opinions and generic drugs. You can reward good behavior and discourage over-use with simple adjustments to your plan’s design.
Secret #5: There’s software available to determine what design will work best for your company.
There are software programs and Xcel spreadsheet available to help you decide on the optimal plan design for your company. The idea of self-insuring small claims isn’t new. Successful companies have been doing it for years and knowledgeable insurance brokers have been advising them. It’s possible to run a feasibility study to determine exactly what your chances are of saving money when you insure the big claims and pay your own small claims. For a free feasibility study for your business please “Contact Us”