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:
- 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.
- 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.
- 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.
- 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
Filed under Contact Group Benefits Advisors, Dallas Fort Worth Group Health Insurance, Employee Benefits Solutions, Group Benefits Advisors, Group Health Insurance Rate Texas, Group Health Insurance Texas, Health Insurance: Texas Small Group, Texas Group Health Insurance by on Sep 12th, 2007. Comment. 
Fully-insured group health insurance plans in Texas are subject to the laws of Texas, as well as federal ERISA laws. As such, fully-insured Texas group medical insurance plans are required to have benefits that have been mandated by the Texas legislature in addition to following federal rules. This includes benefits that the employer and employees may never need or use but must pay for so that other non-employee Texans can be assisted by the mandated benefit.
Fully insured Texas group health insurance plans group, or "pool" the employees of one company with the employees of many other employers in Texas. This is a basic principle of insurance that allows Texas group health insurance companies to spread the risk of major medical claims across a statistically greater number of individuals and companies.
This "pooling" allows businesses, especially small businesses in Texas, to eliminate the catastrophic financial risk of a major medical insurance claim by an employee.
Because of this spreading of risk, a health insurance premiums for a company with a fully insured group health plan will be affected by not only the health and age factors of their own employees, but also by those of other employees and employers in the Texas group insurance carriers pool of members.
Employers with fully-insured group medical insurance plan can partially influence their rates by encouraging employees and dependents to have healthy lifestyles, such as exercising, maintaining a healthy weight, and avoid tobacco and alcohol use. But there is very little at all that a company with a fully-insured health insurance plan can do to reduce the impact of health insurance claims from other employees and companies in the same group health insurance carriers pool of members.
This is why some Texas businesses may decide to self-insure, or self-fund medical claims of their employees. They can more readily determine which benefits that they want to include in their group health insurance plan, with fewer government mandates.
The company that self funds their insurance often contract with a third party administrator or use a Texas health insurance carrier for administrative services only to reimburse health care providers for their employee's medical expenses.
But the overall cost of insuring employees with a self-funded group health insurance plan in Texas is often (but not necessarily) less expensive than the cost of insuring employees with a fully insured group health plan.
Companies with self-funded health insurance plans in Dallas are more in control of their own health costs, as their rates will not be directly impacted by the "pooling" effect of other companies and employees in the area.
Self funded health insurance plans in Texas statistically have more risk of major catastrophic health insurance claims, which makes them more appropriate for larger companies with several hundred employees. But there are examples of "risk-taking" companies with fifty employees that offer self-funded group medical insurance plans for their employees.
Companies with Texas self-funded group health insurance plans can reduce their risk of major medical insurance claims by purchasing reinsurance from a reinsurance carrier in order to reduce their risk of overall medical insurance claims in any one year.
For example, a Plano Texas company with 200 employees could self-insure, but purchase reinsurance that protects the company from the risk of any additional medical expenses after the company paid, say, $250,000 in medical claims in any one year. The cost of that reinsurance policy and the total costs associated with administering the self-funded plan would likely (but not necessarily) be less than the cost of a fully-insured health insurance plan in Plano, Texas.
There is actually a new opportunity for CEOs to consider that could possibility benefit Dallas area companies with either self-funded or fully insured health plans. Within the last two years, group health insurance carriers in Texas have introduced a tremendous number of fully insured group health plans with high deductibles and without Rx or doctor visit copay benefits. Many of these plans have been priced very low on a per employee basis by the group medical insurance companies in Texas.
At Group Benefits Advisors, we have shown client companies how they can reduce the cost of health insurance and lower their risk from a self funded group health plans by purchasing one of these low cost, fully insured high deductible group health plans with deductibles of $5,000 to $10,000 per employee.
By implementing a no cost health reimbursement arrangement (HRA) to reimburse employees employees after they meet the same deductible as they had with their self-funded plan, then "bolting on" to the employee benefits plans such items as a Rx card benefit from lower cost third party resources, the employee has the same benefits as they had before.
But because of the way that some of the Texas high deductible group health insurance plans have been priced by insurance companies, it is now possible that a company could spend less money to cover their employees with one of these fully insured plans and with much less risk to the business than if they had a Texas self-insured plan or partially self-funded plan in Texas with reinsurance.
To determine which strategy works best for your Texas company and for your employees, and for a no-obligation employee benefits consultation, contact Mike Chapman at Group Benefits Advisors, (214) 764-6315 or (888) 398-6246.
Filed under Contact Group Benefits Advisors, Dallas Fort Worth Group Health Insurance, Employee Benefits Solutions, Group Benefits Advisors, Group Health Insurance Quote, Group Health Insurance Rate Texas, Group Health Insurance Texas, Self Funded (Self-Funded) Health Insurance Plans, Texas Group Health Insurance, Texas large group health insurance plans by on Aug 1st, 2007. Comment.
If you are a Dallas Fort Worth, Texas area employer, you may be unwittingly rewarding your employee benefits broker or group health insurance broker for poor performance, and for not having your company's best interests at heart.
The average employee benefits and group health insurance inflation in the Dallas Fort Worth area typically increases in cost to employers anywhere from 10 to 15%. A ccording to Texas insurance law covering small group plans, a major illness or accident from a single employee can lead to a rate increase of 67% if the employer tried to change insurance carriers. This makes it financially difficult for a small to mid-size employer (less than 500 employees) to change group health insurance companies.
In effect, a single group major health insurance claim to a small business locks the employer into potentially years of 15% rate increases from their current insurance company, as this is the maximum allowable annual rate increase according to Texas small group insurance law.
Any employee benefits consultant and group health insurance broker in Dallas, Texas should be rewarded for cost containment, not cost inflation. Yet, as the rates increase for a small company group health plan, the broker's commssion income is increased. The larger the annual rate increase, the more the group health insurance broker earns on the employer's business.
What is the incentive for a group health insurance broker to work on the client's behalf to contain benefits inflation when good advice limits their income? And more importantly, what steps can a good employee benefits consulant or group health insurance agency be doing for their clients to contain group health insurance rate inflation?
First, a good group medical insurance broker should be a year-round valued advisor to the CFO as well as the VP of HR or owner. If the employer only sees their group health insurance agent at annual renewal time, then the employer is not likely to get advice on strategies and methods to reduce employee health insurance claims.
Second, a quality employee benefits consultant should advise throughout the year how the employer can enact strategies that encourage employee behavior that reduces medical claims, and therefore lower rate increases. Consumer driven health plans, such as health reimbursement arrangements (HRAs), health savings accounts (HSAs) and medical expense reimbursement plans (MERPs) motivate employees financially to reduce their health insurance claims, and offer various tax savings to the employer and the employee.
Third, a really proactive group health insurance broker can also advise the employer how to incorporate an employee wellness plan that encourages and rewards employees for healthy lifestyles.
A corporate wellness plan sponsored by the employer, if properly structured, can help at-risk employees lose weight, leading to a reduction in obesity and related diseases such as diabetes, heart attack, high blood pressure and stroke. An employee wellness plan can also encourage employees to quit smoking, which can lead to a direct reduction in cancer and heart/stroke disease.
The return on investment to the employer for a company wellness plan that specifically targets weight loss through diet and exercise, and smoking cessation, is tremendous. A dollar spent by the employer in a well-designed employee wellness plan can yield five to six dollars in saving to the employer in terms of a reduction in future medical claims, medical insurance increases, and lost productivity, plus a reduction in future pain, suffering and mortality among employees.
As a knowledgeable employee benefits consultant and group health insurance broker, Group Benefits Advisors advise our clients throughut the year how to control the costs of employee benefits, without a reduction in the level of benefits offered to employees. For more information and for advice about other ways that Dallas, Fort Worth, TX employers can control the cost of employee benefits, contact Mike Chapman, (214) 764-6315, extension 120, or (888) 398-6246 toll free.
Filed under Consumer Driven Health Plans, Contact Group Benefits Advisors, Dallas Fort Worth Group Health Insurance, Employee Benefits Solutions, Group Benefits Advisors, Group Health Insurance Quote, Group Health Insurance Rate Texas, Group Health Insurance Texas, Health Insurance: Texas Small Group, Texas Group Health Insurance by on May 5th, 2007. Comment.