When it comes to your company’s health insurance, there’s good news and bad news.
The good news is that, according to a new report from the Kaiser Foundation, the average premium paid for family coverage has remained relatively stable in 2022 at around $22,463 per year. The bad news is that, thanks to inflationary pressures, that’s about to change, with other surveys forecasting big hikes in health insurance rates in 2023.
“I’m already starting my February and March renewals,” says Cara Kahan, CEO of 1706 Advisors in Northfield. “And we’re seeing renewals averaging between 4% and 8%. Inflation is hitting everywhere.”
As an employer, providing health insurance is an essential benefit, especially in these tight working times. Our challenge is to offer competitive advantages without breaking the bank. So what are the strategies for 2023 to keep our companies’ healthcare costs under control?
“One thing to consider is a ‘level finance plan’ for your business,” says Matt Byrne, executive vice president of Chicago-based Byrne Byrne and Company, which serves hundreds of customers in Cook County and elsewhere. In the region.
A level-funded health plan is an insurance arrangement where you, as an employer, pay a fixed monthly payment that covers “estimated” costs for potential claims, administrative expenses, and any expensive items like surgery or health treatments.
If your employee demographics are trending towards younger ages with few health problems, then you could recover money at the end of the plan year if there are fewer claims and expenses than expected. Any excess would be rolled into future premiums.
“It’s a form of self-assurance and kind of a win-win for employers,” says Byrne. “And it’s become much more popular with my clients over the last few years. I’ve seen some groups save up to 50% compared to other insurance plans, depending on their age group and of their background.”
Another consideration is an ICHRA, or Individual Health Coverage Reimbursement Agreement. With an ICHRA, you still pay for your employees’ health insurance. But instead of forcing them into a plan you choose for them, you reimburse your employees for the health insurance they choose to buy on health care exchanges or through another broker. . And because you give them the option to purchase their own health insurance, you avoid all the time and expense of selecting and administering a group plan.
“If it’s administered by someone who knows what they’re doing, and you’re properly counseled on which plan is best for an ICHRA, you’ll almost invariably come out on top,” says Byrne.
TJ Bullock is also a big fan of ICHRAs because of the great tax benefits that come with these plans.
“An employee doesn’t pay tax on money that comes in, he doesn’t pay tax on money that goes out, and he doesn’t pay tax on interest earned,” said Bullock, owner of Bullock. & Associates, a benefits company. at Oakbrook Terrace, says. “In addition, the employer benefits from a tax deduction.”
In addition to ICHRAs and level cap plans, Bullock recommends that its clients consider health savings accounts associated with their high-deductible plans.
“That way people can set aside pre-tax money for unreimbursed expenses like glasses and acupuncture,” he says. “And even if they don’t use it all, the money grows tax-free and they can carry it forward to the next year.”
Bullock is also encouraging its customers to expand the use of online counseling services that many insurance companies now cover so employees can get medical consultation online and increase their mental health benefits using platforms like BetterUp and Teledoc.
“Mental health, in particular, is a huge issue that can seriously harm both your employees and your business,” he says. “Numerous studies have shown how unaddressed mental health issues hurt productivity and cost employers billions each year and that physical health issues tend to be more costly if there is also an untreated mental health issue. treaty.”
Cost control will certainly be important this year, but cost isn’t everything. In many cases, it’s not as important as providing the right kind of health benefits that best suits your organization.
“When it comes to health insurance, you have to decide what your priorities are,” Kahan says. “Does it pay? Is it deductible or paid? What do you think, as an employer, of contributing? What do you think your employees can afford?”
The most important thing, she says, is to work with a good benefits consultant to understand what others in your market are doing.
“Once you’ve done that, you have to go back and look in the mirror and say, do my benefits reflect my company culture and my own personal philosophy,” she says. “If you just shop one number, you will always fail.”
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