Are you the owner of a small or medium sized business and getting frustrated with your companies health insurance plan? You might be wondering, why do my costs continually go up each and every year? Any time you press your insurance company or your broker for answers, they come back with vague or general comments that still leave you feeling confused. A common answer is that 8% to 12% renewal is just “Trend” which is to say that in this inflationary market, everyone’s prices are going up that much so there’s nothing you can do about it!
We like to compare health insurance to home ownership. Think back to when you were renting a home or apartment. When you broke out of that cycle and owned your own home, you gained a clearer picture about the costs associated with it. The same is true with health insurance. When you own your own health insurance plan, you get a clear picture about the costs associated with your plan and finally have control over how things are being spent.
I want to lift the curtain on health insurance and help you see how things actually work and more importantly what you can do about it.
Take your health insurance premium for example. Your health insurance company asks you to pay your premium monthly. Behind the scenes, they split this premium up to pay for fixed costs and variable costs. They take the fixed cost portion of everyone’s premium and use it to pay for the different components of your plan:
For example you’ll have:
- Stop loss, which is like behind the scenes insurance protection for your plan
- The Network, which controls the doctors and hospitals you have access to
- Claims Administration, which are the people and processes that manage the claims when they come in
- Pharmacy, which manages the cost of prescription medications
On top of all that, your insurance company of course keeps some of your premium for their own overhead and profit.
The variable cost portion of your premium is set aside for the payment of claims. If all of your employees claims come in lower than the total amount collected in premium, this is just extra profit for your insurance company.
When you own your own health plan, the first thing you do is cut out insurance company profits and overhead. You then isolate each of the separate components of your plan and shop them out on the open market. Not only will you be able to customize all of these pieces to operate how you want them to, but we achieve lower pricing by shopping them each separately. Next, having a clear picture of the claims that are incurred with your plan helps us to come up with creative solutions to help lower those costs as well. The best part is that any money left over at the end of the year is yours to keep!
When you own your own health plan you have complete transparency with all of these costs so you eliminate all of the hidden revenue streams and misaligned incentives and can finally have clarity and control over every dollar spent.
If you’d like to learn more about this, click here to schedule some time to meet with us!
