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As an employer, you might feel overwhelmed making decisions about health insurance for your employees.

 

But there’s good news.

Even though health insurance might seem complicated, it’s easier than you think.

Here’s the best way to understand it.

There are three main components to a health insurance plan:

  • Administration
  • Reinsurance
  • Claims

The thing that matters the most is the claims.

Health insurance costs are fundamentally driven by claims.

Claims can cause significant spikes in expenses, while administration and reinsurance costs typically increase by only a small percentage each year.

To manage these costs effectively, it’s crucial to understand what is driving your claims.

How It Works

In a recent case, one of our clients incurred a 29% increase in cost. The first thing we did was to look at the data to see what was driving the claims. We discovered that the current benefit design encouraged employees to use the emergency room for non-emergencies. Why not, the cost was only a $250 copay.

By adjusting the plan design, we increased the cost-sharing for ER visits, requiring employees to pay their deductible for non-emergency visits. The ER would only cover visits that were a true emergency.

We also educated employees about their telemedicine benefits which allow them to consult a doctor 24/7 at NO cost. The doctor would direct their care, including calling in a prescription. Another option for them was to use Urgent Care at a $75 copay.

Both options are much less costly to the claims fund and less expensive than the deductible.

Address High-Cost Medications

The next thing we helped this client resolve was looking at the cost of employee medications.

We discovered that weight loss drugs were the second item driving up costs. Did you know that according to GoodRx as of June 2024, Ozempic is $1,000 a month, Trulicity is $850, and Mounjaro is $1,200?

This group had 9 employees using these medications, which were drugs technically designed for diabetes.

How did these medications impact the financing of the plan?

Nine employees with an average of $1,000 per month in medication costs:

$9,000 x 12 months = $108,000

This was the amount needed to be in the claims fund just to cover these nine employees’ medications.

That equals $200 per all 55 employees per month to fund just these medications.

How did we fix this?

The knee-jerk reaction is to not cover any GLP-1 medications. This sounds good but you are trying to create an environment where your employees get and stay healthy.

To manage these costs, we decided to eliminate coverage for GLP-1 medications for weight loss. For employees with type 2 diabetes, we implemented a step-therapy approach, requiring them to try less expensive alternatives first. “Pre-diabetic” employees were no longer eligible for these medications under the plan.

I hope this example helps you to see how beneficial it can be to have a comprehensive review of your plan before the renewal period.

Monitor Your Claims Fund

For our clients, we would not have been able to lower healthcare costs effectively without a detailed analysis of the claims fund.

Throughout the year, it’s essential that your agent monitors your claims fund closely. If it’s operating at a deficit, it’s a signal to investigate what’s driving your claims.

Be prepared for your renewal by working closely with your insurance agent to research and understand the underlying factors. This proactive approach is key to creating a sustainable health insurance plan for your company.

Yes, sometimes healthcare is still overwhelming, but by taking these steps you can better ensure quality healthcare for your employees while managing costs effectively.

 

Braden Benefit Strategies, Inc. is a group health insurance agency based in the Atlanta Metro area, specializing in small businesses with 20 to 300 employees. Our mission is to provide expert advice to help you manage one of the largest expenses on your P&L while ensuring your employees have access to quality, affordable healthcare. We would be honored to become your trusted agent. Call us today to find out how we can help you at 770-447-9843.

 

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Victoria Braden

President/ceo

BRADEN BENEFITSRATEGIES INC.

With 30 years of experience, specializing in group health insurance for small to medium size companies in the state of Georgia who are looking for affordable and quality employee benefit solutions.