Decisions For Fully-Insured Renewals: Are You Facing a 40% Rate Increase?

BY RYAN SPENCER
Fully-Insured Renewals
The coronavirus has threatened businesses all over the world, and now it could force dramatic increases in insurance premiums for fully-insured companies. One analysis predicts that rates could jump by up to 40% in 2021 if the coronavirus continues to infect Americans.

In the face of such enormous rate hikes, the responsibility for cash preservation in your company falls back onto the CEO and CFO. Before taking drastic measures to absorb the financial blow, check your benefits package. You can unlock new savings and possibly even reverse the 40% rate increase trend by managing your benefits supply chain.

Your response time is critical. Renewal season comes quickly, so evaluate your options and make a strategic decision that saves your company money while delivering a high-value benefits plan to your employees.

Next Steps for Fully-Insured Plans

If you’re concerned about how a 40% rate increase could impact your company, you and your team should immediately take two steps toward a solution:

1. Talk to your benefits advisor about risk management practices. Now is when your advisor must shine brightest. Inaction could lead to significant price increases that make the health plan difficult for your business and employees to afford. Cost containment strategies are critical for ensuring your employees receive the same level of care they currently receive.
2. If your benefits advisor fails to generate new ideas, look for a new vendor. You rely on your advisor to help your company get through crises like the coronavirus outbreak. If they fail to propose ideas that prevent dramatic rate increases, it’s time to move on. Looking for a new partner in uncertain times may feel uncomfortable, but it will feel more uncomfortable next year when your company has to enact layoffs or suffer through significant budget cuts to afford your benefits plan.

The Self-Funded Opportunity

One option in the face of potentially massive rate increases is switching from a fully-insured plan to a self-funded plan. When managed appropriately, a self-funded plan grants you more control over how your plan is structured, where your employees receive care, and the costs associated with that care.

While with no changes, self-funded plans save companies 5% annually on benefits costs year-over-year, the real value is in the flexibility that comes with it. While self-funded plans can be more expensive in years when employees need additional health care, it allows greater visibility into the plan, and with the right advisor and levers, employers are able to create a sustainable solution and protect their plan from year over year rate hikes.

Self-funding isn't the ultimate answer by itself, but it paves the roadway to deploy strategies that fight against the pandemic and similar economic challenges in the future.

Looking Ahead

With the coronavirus sending more and more patients to the hospital for expensive emergency treatment, insurance companies have to protect their bottom line with higher premiums. Now is the time to act. If your broker is unsure how to respond, find someone else who can map out a strategy to protect your company from the massive rate increases on the horizon.


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