How to Control Group Health Insurance Cost Factors

Group health insurance cost factors over which employers have some control are:

• Premium: This is a group insurance focus for most employers. They have sought to minimize the cost to employees. As a result, employees, with little or no investment or accountability, have overused healthcare. The overuse drove premium costs to their present highs. Why? Because, insurance is intended to cover catastrophic costs, not the everyday expenses consumers could afford to pay themselves;

• Deductible: The higher the deductible, the lower the premium. Surveys show that 92 percent of people never reach their annual deductible. They can save money by becoming a more active steward of their healthcare without sacrificing their health. This is the premise of the high deductible health plans that are the most popular solution of small business CEO’s. HDHP’s reduce premium and help get employees actively involved in their healthcare affairs. That reduces employer responsibilities and costs;

• Health Savings Accounts: For qualified low-premium high deductible health plans, an HSA matches with the deductible as an IRA-type, portable account that permits the employee to save and control funds on a tax-advantaged basis. An HSA can be used to pay qualified medical expenses. Employers can contribute to employee HSA’s from a portion of premium reductions realized through the higher deductible plan;

• Health Reimbursement Arrangements: HRA’s are tax-favored plans, owned and controlled by the employer. HRA’s can be an alternative to HSA’s by which an employer can reimburse employees for a portion of their healthcare expenses. Small business health plans used in conjunction with HRA’s are high deductible with lower premiums, but do not have to meet HSA standards;

• Co-Pay: Low co-pays are very expensive and definitely not cost effective for consumers. Typical consumers visit a physician two to four times a year. For most, eliminating or reducing co-pays will essentially be offset by reduced premium cost in a year plus;

• Co-Insurance Factor: The co-insurance factor is the percentage of claims expenses paid by the insurance company after the deductible has been satisfied. A high coinsurance percentage will inflate insurer cost even for high deductible plans. The higher the co-insurance factor (for example 80% versus 70%), the higher the premium and the higher the claims paid by the insurer. Maximum insurance value can be achieved through reducing coinsurance percent;

• Maximum Out Of Pocket: The MOOP is the maximum annual aggregate amount a consumer would pay after deductible as the consumer portion (say 20%) that complements the insurance company’s co-insurance payment (80%). The lower the MOOP amount, the higher the premium;

• Claims: Claims frequency has been high as a result of low deductibles which result in minimal cost on the part of consumer employees. Since employees have little or no investment in their healthcare, they spend it like "free money." Insurance carriers have responded to more claims with higher premium rates. High deductible health plans result in fewer claims because consumers become value shoppers. Thus, we see reduced cost of healthcare, fewer claims and lower premiums.

Most Important Small Group Health Plans Focus

With the traditional plan, employers have focused on minimizing premium cost, deductibles and co-pays. Their purpose was to pacify employees. This caused overuse of insurance and higher claims frequency. As a result, the traditional plan has been priced out of reach for many employers.

More and more, group insurance cost factors have gotten out of control. This has forced many employers to stop offering healthcare. However, as a better alternative to discontinuing employee healthcare, you could opt for the high deductible health plan, at discounted premiums, in conjunction with low-cost fitness culture assistance services to help employees better manage their own fitness and health.

Rather than low deductibles and co-pays, your group insurance cost factor focus for plan design should be on high-deductibles, co-insurance factor, MOOP and claims handling. These are the critical determinants of your insurance coverage. They establish the catastrophic loss limit beyond which you want to protect. You mind your small group health plan affairs best by waiving or reducing co-pays and by increasing the deductible that is an issue for only eight percent of consumers.

In this manner, you can involve employees in their healthcare and protect them against losses in excess of loss limits at the lowest and most effective total cost for group insurance.

To review help available for employees, go to the Fitness Culture.

To see how individuals can better manage their life and lifestyle through wellness and fitness, go to Preventive Health and Fitness;

To see how individuals can better manage their healthcare affairs in less time and at lower costs, go to Healthcare Affairs Management;

To review our Patient Care Plan services that offer healthcare system and financial advice and assistance for individuals, go to Patient Care Plan.

For information on overall solutions for your healthcare, go to Healthcare Solutions.

If you have questions or need additional information, go to our Contact Us Form.

WARNING: NEVER CANCEL YOUR CURRENT INSURANCE UNTIL REPLACEMENT COVERAGE IS APPROVED AND IN PLACE.

To review group quote requirements, go to Group Quote Guide.