Do you offer fully insured benefits ?
Traditionally, fully-insured healthcare has been the standard practice for most companies. And with the creation of ACA, laws are such that medium to large companies are mandated to provide health care. The easiest route to take, in order to stay compliant, is to simply use a private insurance company. These large conglomerates have been built around the act of providing insurance. They employ a huge number of people and specialize in providing the services most companies need. They have optimized broad and umbrella type policies that fit like a poncho over their various customers.
Following the law and providing good enough insurance for employees is the idea behind hiring a private insurance company. The amount of work they save your company and the reduction of headaches makes them a popular option in the marketplace.
The first and most obvious cost of buying a fully insured plan is the cost of premiums. This is the monthly cost that must be paid to the insurance company. It is set on a fixed annual basis for the number of employees on the plan. If new individuals are added, there will be an increase in cost.
The premiums are generally calculated internally by an actuary, employed by the health insurance carrier. This individual, or team of individuals, has the job of analyzing the employees of new companies, deciding how much of an insurable risk each person may be. While the metrics for studying how the premiums are calculated are generally industry secrets, the basics can be inferred.
Fully insured plans look at each individual and measure the risk of the individual's likelihood to make a claim with the policy. The more likely a claim, the more expensive a person is, and the higher a company's premium becomes. One of the largest factors of deciding premiums is based on the age of employees. Older companies are more likely to engage in higher rates of doctor visits and surgeries. When actuaries are reviewing the raw stats of employees, those over a certain age are automatically given a higher price tag.
Depending on the company, there could be a more in-depth analysis of individuals. This could include a biometrics scan and a general health overview. If employees are living unhealthy lifestyles and are at risk of making a claim, premiums will be increased.
Healthcare is regulated by each state, individually. This means plans are taxed at different rates for different areas of the country. Because health insurance falls under the powers of the state, your plan will be affected by local politics. Understanding the differences among states could be a deciding factor, especially if you have a multi-location business.
If you notice, the word "risk" continues to describe the use of medical care. This is because fully insured medical plans are a reactive policy. Companies wait until after an employee is sick or afflicted before paying for healthcare. As you can imagine, this is inefficient and costly. If employees become habitualized to only see a doctor for emergencies, smaller ailments that could potentially prevent more expensive visits will be ignored.
The premiums paid to the company are fixed. Final decisions regarding spending and claims are still done in the company. There is no such thing as refunds or a cash back option. If your company ends up spending less on insurance than what was paid in, the left-over money turns into profit for the insurance company. While this is the way it has always been, is it the most cost effective for your business?