Where to Start with Group Health Plans
As business owners, we are constantly bombarded by decisions. One of the hardest decisions being Group Health Plans. We really don’t need additional expenses but we need to attract and retain good employees. This is why a Group Health Plan becomes necessary in running a business - It is an important part of the package we offer to employees.
Once you are determined to start your group health plan, you need to shop the market. The traditional route is using an advisor who will shop the market for you and “sell” you the best available package for your needs. Once the plan gets going, you and your employees go through the laborious setup process so they can process any claims (which can be made online now). Once you’re done that you are finished – right?? No, this is just the beginning – you and your advisor will need to monitor what is called the “target loss ratio” or TLR. So, what is the TLR? It has to do with the premiums you pay.
The insurance company estimates how much to charge you by approximating how many claims your employees will make. The TRL is the point where the insurance company stops making a profit. Therefore, if you go above the TLR, you can expect your premiums to increase upon renewal. Renewal is a fun time – NOT. Hopefully, your advisor has been negotiating hard to keep your premiums the same or lower.
But what is the alternative to a higher premium? The only alternative is to change insurance companies. This involves going through the whole setup process again for both you and your employees. Because of this lengthy task, we often default to keeping the same provider even if it costs more.
Like everything, there is a better way to manage the pain of continually setting up a group health plan. In the marketplace, there are Third Party Administrators who have simplified the setup process.
Third Party Administrators (Administrators) act as your HR department, or as an extension of your current HR department for benefits. They help plan your benefits and customize them to your needs and your budget. They also negotiate with the insurance carriers to bring you the best offer. But Administrators don’t stop there. You and your employees get online access to their system, and they process all your claims for you and your employees instead of going directly through the insurance company.
One of the biggest advantages for Administrators comes when it’s time to renew. They negotiate with the insurance carriers and bring you the best offer. If you change insurance providers, you and your employees do not have to set up a whole new plan rather you continue to use the same online access or app - all the changes happen in the background. It is seamless.
So, if you are looking at a new Group Health Plan or renewing your existing plan, keep an open mind on better ways to manage your business.
Stay tuned for more articles on group health plans.
This article is property of Joe Figliomeni of KLT Wealth Management – who has authorized Josslin Insurance/BBB to reproduce.