Let’s agree on the obvious: businesses are trying to survive in many different ways from the effects of COVID 19 – financially, administratively, safety protocols, health of employees, etc. The survival of the business requires a great deal of focus on the immediate needs during this time. Understandably, businesses have to keep their eye on the ball now more than ever until we see a positive turn of events.
From a financial perspective, health insurance is usually the second or third highest line item expense on a company’s P&L. Many CFOs at HR people think that with other priorities at this time that it’s too difficult and time-consuming to evaluate alternatives to their current plan even though this is a huge expense for companies, and growing.
The reality is that it’s not a difficult and time-consuming exercise to determine whether other alternatives exist that could save their company between 20% and 50% on these exorbitant premiums and claim costs. The whole process can be done diligently and comprehensively and does not have to consume other areas of focus or at the expense of other priorities within the company.
Here are the simple steps:
- Gather the current claims reports for the past 12 months and have an evaluation and repricing done by a third-party. This must be done while keeping the benefits exactly the same as they are currently.
- Have an advisor/consultant assemble 1 recommended program – not a slew of alternatives.
- Evaluate whether the potential savings is financially compelling enough to consider a change.
- If it is compelling, request a timeline with which to implement a new program.
- Ask for references.
- Communicate with employees that a new program is coming on the effective date.
- Implement the plan with your new health plan advisers and their vendors.
- Conduct Open Enrollment meetings through Zoom which will allow in-house employees as well as those who are working remotely to login and hear of the new program. By the way, it can be recorded for anyone who is not able to attend and or use for new hires.
- Go live and reap the savings.
With regards to #1 above, we have been able to gather the data, information, and contracts directly from the incumbent carrier with the group’s permission, of course – this saving the time for CFOs and HR.
The exercise to reprice medical and pharmacy claims allows for an exact understanding of what a company may have overpaid in the past 12 months. This takes about two weeks once we have obtained all the information and enables management to stay focused on the priorities and not be distracted by having to go back and forth with an insurance company. As was stated above, the assumption here is that all benefits remain the same – no higher deductibles, co-pays, or out-of-pocket expense. This allows the decision making process strictly a financial one.
As far as a proposal goes, we are able to simultaneously receive a variety of quotes while the repricing exercise is underway so that the whole process takes less than a month.
The vast majority of companies renew January 1 every year. It’s now the middle of August and there is plenty of time to effectively evaluate a new program and the savings that it can bring, and get it implemented. Even if a company renews at a date other than January, considering the financial circumstances that businesses are facing, companies can terminate their plan with the incumbent insurance company with a 30 day notice and get rolling with a new one.
Who knows? You may be able to drop the cost of your health plan considerably and use those savings elsewhere.
You don’t know what you don’t know. Stay safe and be well.
Frank Stichter has worked with partially self-funded employers for almost 40 years and brings a level of expertise and experience that enables his clients to considerably reduce their health insurance costs while improving benefits for employees. You can reach him at [email protected].
