Last year, business received a hard slap from the economy. While the sting remains, the initial pain has worn off a bit.
Still, companies made decisions they might not have in an otherwise stable environment. One of those choices might have been to purchase cheap, corporate-sponsored health insurance. Unfortunately, it was all too common last year. Businesses chased price and abandoned sound employee benefits strategies.
Health insurance has long been a mystery for many organizations. For years it was purchased purely on price with great reliance on brokers to identify the cheapest programs available. Those days should be gone, especially for organizations interested in attracting and retaining high caliber employees.
Organizations have many options that provide great flexibility in plan design and selection. Working through some of the historical myths surrounding health insurance might help, particularly if you are getting ready for your company’s health insurance renewal.
Myth: All health insurance is basically the same.
Fact: Nothing could be further from the truth. Variations exist with coverage, pricing and
service.
Myth: There is not much difference between the various insurance carriers.
Fact: The carriers are similar in many respects, yet can differ on their provider networks, discounts with health care organizations, claims service and geographic coverage. For example, not all carriers have access to all the major Northeast Ohio hospital systems, which significantly reduces your employees’ options and access to quality health care.
Myth: Insurance agents or brokers are all the same, so it does not matter who represents my
organization.
Fact: Insurance agents must be licensed in the state of Ohio to conduct business. That is where the similarities end. There are hundreds of licensed agents in the area, and they may differ relative to size of their organization, relationship with insurance carriers, service team, administrative support and product knowledge. The good ones are great for your business, and the bad ones can really hurt your employee benefits program.
Myth: Our insurance agent’s job is to get us the lowest price year after year.
Fact: If your organization believes this one, good luck. Price should only be one factor in determining a health insurance program that meets your company’s needs. Your agent should be working with you to develop, implement and maintain a well thought-out employee benefits strategy. Based on a sound strategy, your agent can then work to identify plans that meet cost, coverage and service criteria. If you only see your agent once a year around renewal time, you may want to think twice about continuing the relationship. Agents should be business partners and earn commissions throughout the year.
Myth: We’ll just change insurance carriers whenever our premiums increase beyond our budget.
Fact: This approach is not a solution in the short or the long term. Buying cheap heath insurance may look good in a single year, but a poor health insurance selection can cost an organization for years to come. Some organizations get lured by an insurance carrier’s artificially low rates and believe these will last. With few exceptions, the party is over in a year or two as carriers seek to recoup their investment and gain a healthy profit on your organization. Health insurance costs are not controlled or reduced by playing this game. In fact, the data suggests that costs actually go up over time by chasing price alone. And carriers are not fans of companies that have a history of jumping from carrier to carrier as it reflects lack of strategy and perhaps other problems.
Myth: Health and wellness programs are a fad and really don’t affect the bottom line.
Fact: These programs have been proven to have a major impact on claims, which are a key determinant of your plan’s annual costs. In addition, your employees derive huge benefits from eating better, exercising and modifying their lifestyle
behaviors.
Today’s health insurance offerings provide companies an exceptional array of options and approaches to develop programs that work well financially, provide great coverage and offer employees incentives to become part of the solution. The great myth is that yesteryear’s approach to buying health insurance is still good business.
Using that model, management teams cross their fingers every year that annual renewals will stay in line with budget and coverage objectives. The fact is: Hope is a horrible strategy for your business.