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It happens once a year . . . Health Insurance open season, when we choose our health care providers and everyone wants low costs and high benefits and is a time of great frustration and some stress for most group insurance administrators of employers everywhere - the dreaded annual group health insurance renewal fiasco. I am going to let you in on behind the scenes dealings that directly influence your insurance policy. Hopefully, this will help you see what you get and part of why. I also want you to see what the people who represent you and your company go through to get you the best, most reasonable coverage possible. More often that not, the current carrier sends a notice about 60 days in advance of the group's renewal date, bearing the grim news that rates are once again being raised for the group plan due to trend, demographics, and claims experience over the past year. The renewal rates are usually high enough to send the group administrator into a tail spin, and frantically he or she turns to the agent that sold them the policy for assistance. The agent generally has two choices: try to appeal and get the current carrier to lower their renewal rate percentage, or shop the account with other insurance companies to get a lower rate. The latter seems to be the way that most end up, and this means a lot of legwork. The group admin must gather all sorts of information, such as providing the agent with a current, up-to-date census, current benefit plan design(s), current and renewal rates, and if the group is large enough, claims experience and loss ratio reports. Once the agent is armed with all of this data, he can then shop the account to get better rates without sacrificing benefits. This can be very difficult and time-consuming. However, if the group chooses to stay with the insurance company that is currently in force, the usual method of lowering renewal rates has been to decrease benefits. This is done by raising the co-pay amounts, deductibles, and out-of-pocket maximums, or by lowering the coinsurance level to 70 rather than the usual 80 coverage for medical and prescription drug expenses after an aggregate (total family) deductible has been met, while often including a preventive care first dollar benefit (for annual physicals and immunizations, etc.). Further, the insured have the opportunity of opening a Health Savings Account (HSA) associated with their high-deductible plan, which offers them valuable tax savings. Employees should ask their CPA for advice concerning HSA plans. Taking it a step further, employers can institute a Health Reimbursement Arrangement (HRA), to work with the HDHP plan, whereby the employer reimburses each employee a certain dollar amount of claims per year (such as $1,000 for single employees and $2,500 for families), reducing the employees' total out of pocket exposure per year. Everyone comes out ahead when these innovative money-saving ideas are implemented in a group health plan. With the economy in the poor state it's in, HSA and HRA plans just may be the shot in the arm that the health insurance industry needs . . . and it seems to be working!
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