It is that time of year again. The broker is calling, presentations are being made, costs are going up, plans are changing, meetings are happening, paperwork is flying, and what is the result … besides chaos?
Our office is seeing an average increase of approximately 6%. OF COURSE, that means that half of them are bigger than that and half are smaller, as that is the nature of “average.” The most useful question you can ask is, “What can be done to control cost?”
If you ask that question, you may get a little frustrated with the answer. Once upon a time, an employer could tinker with the nature of the insurance plan and reduce the cost – the theory was that if we increased the deductible then the cost would come down more than the new risk. This makes sense, PAY LESS every month and if you get sick you will have to pay more … but the more wasn’t as much as the less. So, it was a win.
Now, in the ACA Era, this is no longer a sound strategy. The reason is that small changes do not move the needle on premiums any more … you can increase the deductible, but you only save approx. 1% in premium and … what is the point of that? To save 5% or more on premium the deductibles need to double or even triple. The premium needle just doesn’t move without wholesale changes to the plan design. This type of move ALWAYS puts more financial exposure on the employees than premium dollars saved and that is NOT a win, ever.
Where should an employer focus their efforts if plan design is not going to win the day? First, a full shopping of the market is in order. Have you heard of Cigna-Oscar? Why not?
Next, examine your cost sharing with your employees. Are you too generous relative to the market? Are you not generous enough to attract and retain quality employees? Have you seen any benchmarking data? Why not?
If ever a wholistic approach to health insurance and employee benefits was in order, it is now. We are facing a national staffing crisis. Your employee benefits can help you to manage but you must make sure that your strategy is in line. Beware of unintended consequences.
The post-pandemic ACA influenced benefits environment (call it the PPACAIBE … just kidding) is like a corn maze … you can get through, it will probably be frustrating, you can get stuck and have to retrace your steps, but you will get through … let the people who made it through guide you.