We are all aware that the United States currently ranks highest in health care spending among the developed nations of the world. Lack of transparency in pricing can cause inflated billing, especially in emergency situations. Houston Business Journal did a survey asking business owners: “What keeps them up at night?” where 75% of business owners are concerned about the costs of health insurance.
An executive order
There might be some hope for the future with improvements like the newly signed executive order; which aims to lower rising health care costs by mandating price transparency in healthcare. We may not have the power to bring immediate change to fix the broken healthcare system and stop raising costs. However, as consumers, we can contribute by improving our healthcare literacy by better understanding our options and our coverage as individuals, business owners and executives.
Medical bills are one of the top reasons people have financial downfalls. Some even file for bankruptcy as patients are plagued by the high costs of hospital tests, procedures, medical bills, health insurance, and prescription medications.
Businesses have settled for what they think is the best value, sacrificing benefits, and increasing the employees’ out-of-pocket costs, just to afford coverage.
Healthcare literacy is your power
Understand your coverage as each insurance brand may offer one or more of these common options:
- Health maintenance organizations (HMOs)
- Preferred provider organizations (PPOs)
- Exclusive provider organizations (EPOs)
- Point-of-service (POS) plans.
- High-deductible health plans (HDHPs), which may be linked to health savings accounts (HSAs)
Learn how these plans differ and identify what your best options are. Being familiar with the different options can help you pick one to fit your budget and meet your health care needs. To learn the specifics about a brand’s particular health plan, look at its summary of benefits. In order to prevent being taken advantage of, it is your responsibility to increase your Healthcare Literacy. If you don’t, you might risk the possibility overpaying over $350 at the hospital vs. $35 at the lab center for the same x-ray services.
Fully insured vs. self-insured plans
These are the two primary health insurance plans that businesses select from. Understanding how both types of health plans work can help businesses make an informed decision and could even save their company money. One of the biggest differences between these two plans is who assumes all the risk?
With a fully insured plan, the risk falls on the insurance company and the company pays a set premium price each year based on the number of employees who are enrolled in the plan each month. If any claims exceed the projections created at the start of the year, the insurance company assumes all legal and financial risk. As the price is fixed until the employer makes a new deal, there are no financial surprises.
With a self-insured plan, the employer assumes most of the risk. Stop-loss insurance which places a limit to the number of claim expenses a company is liable for each year, per employee provides some level of protection for companies in the event that several employees require costly medical expenses in the same period. An employers’ “risk” is managed with the use of stop-loss insurance that provides protection against catastrophic claims to self-funded employers as an employer’s health plan is reimbursed for any claims that fall above the set limit.
So are you compromising your bottom line by fearing the risk of a self-funded plan?
Employers do assume some risk associated with their plan, but they also gain the ability to keep any savings year after year. Self-funding gives you the freedom to create a benefit plan that is designed to save money while meeting the needs of your business and employee population.
- By being fully insured, as an employer, you are giving nearly all of the control of their plan to the insurance carrier–reporting, benefit options, networks, and even any savings the plan experiences.
- By being self-funded, as an employer, you have the option working with a third-party administrator to create your own plan for success – a health plan that is designed to meet your unique business needs and complement the needs of your workforce.
For one example: if you have a highly obese population, you can choose a wellness plan that helps employees address their current health situations while proactively helping to prevent costly health conditions from occurring in the future.
Transparency and Analytics
When it comes to Healthcare benefits and costs, it is overwhelming due to the complexity of the subject and lack of expertise within the organization. You have to have data that gives you a complete insight into how your plan is performing based on specific measurable data to strategically make INFORMED decisions for your business. Transparency and analytics are important to protect your bottom line long run. Human Resources are generally in charge of this spend category and it is wise to involve Procurement personnel when shopping for and/or extending healthcare plans so they can leverage their analytical experience to have the best coverage and cost overall when engaging with Healthcare experts. More heads are better than one!
So decide if you want to give up the control and pay more? or take control and cover the risk with the right and knowledgeable team?
Remember, health insurance brokers provide quotes and help employers manage their premium increases. Find a service provider who focuses on reducing the dollar spent on claims to reduce your health benefit costs. It is the broker’s responsibility to build a great relationship to keep the business. They are not there to worry about the businesses’ bottom line, so use the “trust but verify” strategy and select the plan that is best for your business.
For more information check out Healthcare savings page. It is never too late to go to a new direction with health benefits in order to reach the total cost of ownership in the healthcare category.