Not All Health Plans Are Created Equal
It sounds like common sense, but with all the noise in the employee benefits world today about compliance, the Affordable Care Act, and benefits administration, it’s easy to forget the primary reason insurance agencies exist, to evaluate the most cost effective employee benefits programs for employers and their employees.
With health insurance premiums continuing to rise, the need for a trusted advisor with experience evaluatingalternative plan design strategies is more important than ever.
Here are the top 3 group health insurance strategies every employer should explore:
1. Level Funding
Level Funding is an innovative self-funding solution. It combines financial predictability and the control and information you want, with an opportunity to benefit from a favorable claims year. With a level funded policy, the company pays a level premium each month just like under a traditional fully insured medical plan. However, at the end of the year, if the actual claims paid by the insurer are lower than what was expected, the insurance company issues a credit to the employer.
This approach can potentially provide a 30 to 40 percent annual refund on health benefit costs.
2. Health Reimbursement Arrangements
Health Reimbursement Arrangements (HRAs) helps employers control health insurance costs without sacrificing the quality of the benefits offered to employees and their families. Typically, an HRA is used in conjunction with a less expensive higher deductible or co-pay health plan. Introducing a high deductible reduces the fixed premium paid to the insurance company. With an HRA, employers can set aside money for each employee to help pay for the higher deductibles or co-pays. However, unlike paying a fixed premium to an insurance company, the employer retains whatever HRA funds are not used by the employees. Statistically, employees only use 40-60% of allocated HRA funds.
3. Private Exchange
An exchange is an online store where employees can purchase benefits. Exchanges offer multiple options for health insurance plans, and may also offer other benefits, such as dental, vision, life, disability, and more. Private exchanges are run by private companies while public exchanges are run by the government.
In most cases, the employer uses a defined contribution strategy to give each employee a set amount of funds to build his or her own benefits portfolio. The employees and their families can then go shopping in the exchange with the funds allocated by their employer, and supplement their own, if needed. Depending on the exchange, employees can receive guidance and education about the plans to help them make purchasing decisions.
Regardless of what employee benefits strategy works best for your organization, it is crucial that you partner with a trusted advisor who has experience evaluating and implementing employee benefits programs. Ashton Benefits has 22 years of experience working with mid-sized companies and has helped thousands of companies save hundreds of millions of dollars in employee benefits costs. Speak with us today to see if we can help your company like we helped thousands of others.