Dallas Employee Benefits Open Enrollment Planning Period Opens to More of Same Increases

Dallas group health insurance brokers  and Dallas employee benefits agencies as well as others throughout Texas will start this month to contact their client companies about next year's increases for employee benefits and group health insurance plans that renew January 1st. 

The ninth annual nationwide survey that was released yesterday from the Henry J. Kaiser Henry J. Kaiser Family Foundation/Health Research and Eductional Trust gives Dallas employers a glimpse of what they can expect in 2008, but already painfully know:  the cost of group health insurance continues to outpace the rate of inflation and the rate increase of employee wages.

Some of the highlights of the report include that nationally, the group health insurance premiums increased an average of 6.1% last year, the lowest increase in eight years.  The report goes on to indicate however, that the increase in medical expenses was higher than this, so insurers will likely increase rates faster than this to maintain profit margins.

The Kaiser report also points out that the average nationwide cost of group health insurance coverage wass $4,700 per employee, and over $12,500 per family in 2006.  Since most employers cover a portion of the coverage cost for employee only, this means the average family of four is paying about $10,000 per year for their family's coverage.

The report makes the relative comparison that the employee family coverage cost is about the same as buying a new small car for the employee every year, say a small Hyundai or Kia.

What the report fails to highlight are the regional differences and differences among employee group size.  For example, Dallas has one of the highest uninsured population in the state, approaching 50% of the population.  There are lots of reasons for this, including the high nonresident population and the high quality of public health care available at Parkland.

The other area that the report glosses over is the disparity in employer size.  Large employers who self-insure can better control the health claims cost from employees, and have lower rate increases.  Fully insured employers that tend to be small to mid-sized companies have much higher rate increases than the national average. 

And the group health insurance rate increases to small businesses with 50 or fewer employees have increased so much that only about 50% of Dallas small employers today can afford to offer a group health plan to their employees.  Rate increases of double the national average is not untypical for small employers in the Dallas area.

So while nationally the "average employee" is buying the equivalent of a Hyundai every year for their family's group health insurance coverage, here in the city of Dallas, long reknowned for big hair and pickups, we can probably claim that the average employee is paying the equivalent of a leased Hummer every year to insure their family.

So what's a Dallas employer to do to buck this trend?  If an employer gives up and stops offering group health insurance, the company not only contributes to the community's huge uninsured problem, but they are then at a competitive disadvantage.  It's tough for a small Dallas company to recruit the best and brightest employees without offering employee benefits.

Here's some suggestions for Dallas area employers who are fighting employee benefits inflation:

1. Hire employees who are motivated to not only improve the company, but are also motivated to improve their own health.  Employees (and spouses) who take care of themselves, watch their weight, don't smoke and exercise are much less likely to have a catastrophic health insurance claim.
2. Institute a high deductible health plan with a health reimbursement arrangement (HRA) for employees.  With this arrangement, a typical company that raises their deductible from $1,500 to $3,000 per employee will save so much more by raising the deductibles that they can afford to "partially self-insure" by reimbursing employees for any medical expenses from $2,000 to $3,000 after the employees pays the first  $2,000 in expenses.  The savings come from the fact that fewer than 20% of employees will ever meet their deductible in any given year, so the employer funds the HRA reimbursements from the smaller premium checks that they write to their insurance company.
3. Purchase a "medical gap plan" that reimburses employees up to $3,000 for hosital confinement.  Employers will save enough in insurance premiums to pay for this supplemental plan, and then some.  Gap plan coverage is much cheaper for an employer than the extra cost of a lower deductible plan.
4. With a small portion of the insurance premium savings, implement a corporate wellness program that rewards employees for maintaining or improving weight, maintaining or stopping tobacco use, or for exercise.  New HIPAA regulations now allow employers to "reward" employees monetarily up to 20% of the portion of the health insurance premium that employees pay.  Employees (and spouses) who do not enroll in the wellness plan will not get rewarded, so they end up paying more for their group health insurance.  And since these employees are more likely to have catastrophic health claims, a wellness plan adds an extra element of fairness to the employer's employee benefits plan

With these four steps, Dallas employers will reduce their premiums, plus reduce their employee health insurance claims, which will lower rate increases in future years.  And by encouraging healthy employees/discouraging unhealthy employees through the rewards system of an employee wellness plan, employers will have a healthier, more productive workforce with higher productivity and less lost time and disability due to illness.

The days of a business owner or president letting a lower level employee pick a couple of plans once a year from their Dallas group health insurance broker are over. The potential cost consequences of this passive approach for even a small employer is hundreds of thousands of dollars per year.  Today, presidents, CEOs and CFOs in Dallas must get actively involved in controlling employee benefits costs.  Failing to do so will result in continuing to handing out Hummers to employees every year, or to wondering why their company can no longer attract quality employees to their company.

For more information about how your Texas company can control the cost of group health care and still attract quality employees, contact Mike Chapman at Group Benefits Advisors, (214) 764-6315, or (888) 398-6246