Fall is a blast. Every fall, we see a new school year, football, fantastic weather, the hope and promise of business growth and the chance to separate from the competitive herd.
Fall also includes challenges, as we try to connect the value message of variable funding to an employer community that remains fixated on up-front, fixed-cost funding. The back and forth over renewal increases can be painful for everyone involved. In response, many advisors have presented a strategy to employers that is commonplace: employers confronted with the ever-increasing, fixed-cost health insurance premiums shift costs to their employees through higher deductibles.
According to the Kaiser Family Foundation, four out of five workers have a deductible as part of their plan benefits, and the average annual deductible rose 12 percent to $1,478 in 2015. During the past five years, deductibles have grown ten times as fast as inflation and nearly six times as fast as wages. How long will this strategy continue to be available to employers? I suggest the road is almost at an end. But, what can be done as an alternative?
For one, when an employer is confronting sizable renewal increases, advisors can present them with the value of being self-funded in a captive. This will give the employer the information necessary to see what is driving their increased costs. They will also gain control over corrective actions such as plan design, cost containment and population health.
Another approach is to match an increased deductible with Roundstone’s value or voluntary benefit offerings. Accident, Medical Supplement and Critical Illness coverages can go a long way in plugging the employee’s economic hole created by a higher deductible. These coverages are available to any employer and can be quoted along with Roundstone’s medical captive proposals. This strategy can be a win for both the employer and the employee confronting rising health insurance costs.
The next time an employer doesn’t know where to turn because of a double-digit price increase, give some thought to a captive proposal with a higher deductible plan combined with the value-added coverages of Accident, Medical Supplement and Critical Illness. The cost increase of the plan not only goes away this year, but the captive funding approach will deliver cost savings into the future.