Tips to Keep your Medical Renewal
Costs Under Control

by Matt Krull

Although employers face many pressing issues, escalating employee benefit premiums rank right at the top. Kansas City small businesses have seen their group medical options cut in half over the past five years due to mergers and acquisitions as well as companies simply choosing to get out of the medical insurance market. As a result, the market has become very tight. The annual cost of insuring an employee is approaching $6,500 for 2003. Small employers are desperately looking for solutions to save premium dollars while still offering a quality group medical plan that will provide their employees with ample coverage.

Here are 10 points to remember as you prepare to renew your medical plan:

• There are no bargains with group benefits. Insurance carriers evaluate the group’s risk, industry and geographic location, and they will underwrite the groups to determine the appropriate premium based on the risk of the group.
• Communicate to employees. It is critical to make employees aware of your investment in them and in the plan. Employee cost sharing has made many employees aware of the high cost and valuable benefit that comes with a group plan.
• Transfers the risk under the most appropriate terms, but only after you have determined the plan that is the best for the group. By evaluating the financial stability of the carrier, plan design, premium structure and the carrier’s network, a group can usually arrive at its decision and determine the method for funding the plan.
• Develop a long-term strategy with the insurance carrier and your broker/con- sultant. Employees will be much more open to change when the changes are going to occur over a 2 to 3-year period. This allows employees to plan and budget for upcoming years and their medical costs.
• Focus on your productive employees. Research shows that roughly 85 percent of group claims are incurred by 15 percent of the employee population. Provide a plan that focuses on the 85 percent of your employees. These employees are going to be your most productive and contribute more to your bottom line. Help out the 15% of the group by implementing a Wellness plan to complement the groups health plan. The days of providing a complete comprehensive medical plan for all employees that includes little out of pocket and unlimited catastrophic coverage protection are quickly fading.
• Consider Consumer Driven Health Plans (CDH). A few CDH plans have entered the Kansas City market and more are surely to come. Whether they are the answer to 20 percent annual increases remains to be seen. What is known about CDH plans is that they will get the employee more involved in the insurance buying process. The evolution of managed care has caused a disconnect between the insured and the provider through the third-party payor system. A vast majority of employees don’t know the actual cost of the care they receive.
• Provide employees with easy access to plan coverages and details. Almost all insurance carriers provide valuable information about their plans through their Web sites and other forms of communication. With most insurance carriers, individual members can customize their own Web sites with information specific to their conditions and/or interests. Access to hospitals, doctors, claim information and pharmacy benefits are available at the employee’s fingertips.
• Focus on wellness and productivity. Get employees to understand that future plans are going to emphasize more personal care and health. Employees who take an active role in their health will be rewarded with the plans of the upcoming years.
• Explore voluntary (employee paid) products. Make voluntary products a part of your whole package. Use them to support your core plans and possibly eliminate some of the non-medical employer-paid plans and allocate the premium to the group medical plan. n Finally, involve your employees. Use surveys to find out their preferences. Employees need to know that their overall compensation package is a blend of salary and benefits. Both directly affect the other.

Matt Krull is a benefits consultant with CBIZ Benefits & Insurance Services. He can be reached at 913.234.1774 or by his e-mail at mkrull@CBIZ.com.