17 Aug Rates are Rates are Rates: Myths vs Truth
MYTH: My health insurance broker can negotiate better rates than other brokers.
TRUTH: As long as you are providing the same employee census, all brokers MUST receive the same exact rates from the carriers when quoting health insurance options. Brokers A will not automatically receive better rates than Brokers B just because of who they are, how big their agency is or how much business they place with a particular carrier.
MYTH: We have grown so much the last few years. Our rates should be going down as we grow.
TRUTH: An increase in size does NOT automatically equate to lower rates. The Affordable Care Act has dramatically changed the underwriting landscape for health insurance carriers. It is very rare to see a decrease in rates, but the best chance to see better rates is to continually educate your employees on health & wellness. The main objective behind any health & wellness program is to prevent unnecessary medical office visit trips, unnecessary inpatient admissions, and unnecessary prescription drugs. This reduces your claims costs and helps insurance carriers provide lower renewal rates. A 5% increase is sure a lot better than a 25% increase!
MYTH: We are very similar in size to our competitor, and they get better rates on their plans.
TRUTH: There are many factors that determine rates for insurance plans – group size, group location, age/sex of the employee base, claims utilization history, etc. It is not common for 2 groups of similar size and similar plans to have the exact same rates.
Many of our clients use their insurance plan as recruitment and retention tool. The benefits package works better in this capacity when you have attractive options and eligibility criteria as well as a healthy company contribution. Whether that is a set dollar amount or a percentage of the total premium, make sure that you set your contribution level so that it helps you achieve your goals of attracting and retaining quality people.
The decisions you make concerning the plans to offer and how much to contribute to those plans are not only regulated now (for groups over 50) through the ACA affordability provisions, but have a significant impact on your bottom line. We can help you make those decisions.
Ask us about our BenDecision tool and how we can use it together to save time, money and to decrease your frustration during your renewal and open enrollment periods!
Jeff Koch, Director of Benefits & Marketing Communications for Resource Alliance.
Jeff is a consultant, not an attorney, so he shares his opinions, not legal advice, about increasing performance and limiting liability.