Viewpoints from Craig Hasday
With record-breaking general inflation rates, the specter of significant medical insurance cost increases has been looming over employers and individuals alike.
This comes in the wake of Kaiser Permanente’s high-teen renewal increases released recently. The good news is that it seems these increases may be significantly lower than initially expected. Nevertheless, many employers are still grappling with medical insurance cost increases that are dramatically higher than what they experienced during the years of COVID-driven cost suppression.
It is crucial for employers that are facing unaffordable increases in their medical insurance costs to explore various strategies to mitigate their financial burden.
One common approach used by insurance providers (including Kaiser Permanente) is to project high expected trends in healthcare costs even though this inflation may not necessarily materialize. With large trend rates impacting renewal costs, employers should closely examine alternative funding options – especially those where maximum costs are capped. Under these programs, the employer is not responsible for paying excessive amounts if these projected costs do not materialize, yet there is downside protection if they do. Captive Insurance programs can also mitigate individual client risk.
Another alternative is using Individual Coverage Health Reimbursement Arrangements (ICHRAs).
These plans allow employers to provide employees with a fixed amount of money to purchase individual health insurance coverage. This empowers employees to choose a plan that best suits their needs while potentially reducing costs for both employers and employees. However, these plans are administratively complex, and selecting the right partner helps avoid any potential disruption to employees and their families.
Emerging providers in many markets can also help lower healthcare access costs.
These providers offer innovative solutions to avoid shifting towards even higher deductibles and increased cost-sharing. By partnering with such providers, employers can provide their employees with more affordable healthcare options without compromising the quality of care.
Managing eligibility is another critical opportunity in controlling healthcare costs.
Implementing eligibility and contribution management strategies won’t lower per-employee costs but can reduce overall employer spending. By carefully evaluating eligibility requirements and contribution structures, employers can optimize their healthcare plans and ensure that they are not overpaying for coverage.
It is essential to work with an innovative broker who possesses the knowledge, access, and market clout to educate clients about these available options.
Early engagement with such a broker can help minimize disruption and ensure that employers are steered toward the optimal solution that meets their specific needs. EPIC offers comprehensive solutions, market influence, and expansive resources to guide employers toward the most suitable healthcare options. By leveraging their expertise, employers can make informed choices to balance budgetary and employee satisfaction.
Reserve your spot at our upcoming Benefits Curve webinar on Thursday, October 26: How to Hit Back When You’re Hit with a Massive Renewal.
EPIC offers this material for general information only. EPIC does not intend this material to be, nor may any person receiving this information construe or rely on this material as, tax or legal advice. The matters addressed in this document and any related discussions or correspondence should be reviewed and discussed with legal counsel prior to acting or relying on these materials.
President, National Employee Benefits Practice