The Best Ways to Save on Small Business Health Insurance

"There's got to be a cheaper way to offer employee health insurance."

That's the reply we hear from companies every day.

For good reason.

The cost of employer-based health insurance has roughly doubled in the last 2-3 years.

That's insane when companies are being squeezed everywhere else in this so-called "recovery".

Group health insurance is so opaque that many employers feel there must a better way...they just don't know what it is.

There may be.

Let's look at current options to reduce the cost of group health coverage.

Of course, as license insurance agents, our services are free to you and we're happy to run a proposal across all the options below at no cost.

What's at stake???

If you haven't had the entire market quoted for you since the ACA change, we can estimate you're paying approximate 20% more than you should be

Let's get started

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Quick overview of the different options with more detail to follow:

1. Small Business Tax Credits
2. ACA rate change opportunities
3. Private Exchange - CalChoice
4. HSA's and HRA's
5. Benelect 3rd Party Administrator
6. Mini-Cafe Plans
7. Narrow network options

In addition to the above options, keep in mind that there may be penalties for not offering health insurance for certain companies.

There's a huge penalty for companies that pay towards employee's individual/family plans.

We can't stress the latter penalty more....it's $100/day/employee; up to $36,500!

More on the new ACA business penalties

So let's dig in...how can we save on business health coverage?

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Small business tax credits through Covered Ca

We'll start with the obvious option.

Found money.

We've written extensively but here are the highlights.

Companies with under 25 or under employees and average salary below $50K (not including owner/officers and their family) may qualify for a tax credit.

The tax credit can be up to 50% of the employee's premium.

The sweet spot is 10 employees averaging around $25K annual salary.

If your company might meet these requirements, contact us immediately at 866-486-6551 or request your business quote with tax credit quote here (click the "tax credit' box)

There are 100's of thousands of California companies that qualify and only 2-3K are taking advantage of it.

No smoke screen...real stats:

 

 

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ACA changes opportunity

For those unable to look up from work, the ACA health law just ripped through the industry and nothing was left the same.

Rates and plans not withstanding!

Everything changed and many companies saw rates swing up our down (mainly up) by 20-30% on average at their renewal.

The plans are now somewhat standardized but the pricing is all over the map.

We run quotes for California companies every day and it's completely expected to see equivalent plans (and network) with pricing different 25-30%.

If you are still with the same carrier you've had for years (or even since last year), it definitely makes sense to run a full comparison quote across the entire market.

20-30% is a lot of money saved!

We can do this for you.

Let us know what carrier/plan you have now and we'll quickly look at all the equivalent options.

You can request this quote here (note your current carrier, plan, and monthly rate).

If we can't find anything better, we'll let you know.

If we can...well then...we love giving great news!

We'll also see if you are eligible for the tax credits mentioned above.

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The Private Exchange - CalChoice

We've seen lots of press about "Private Exchanges" being the future for Employer-based health insurance.

There's some truth to that.

In California, we're fortunate to have a long-established contender in that space...

CalChoice has been around for years and they continue to add carriers/plans and get stronger with time.

There are specific situations where CalChoice is quite a bit cheaper than plans direct from the carriers.

In that case, whether you have that carrier/plan or just want to shop group health, CalChoice must definitely be quoted and compared.

Some benefits of CalChoice:

1. Mix and match carriers and plans including Kaiser
2. Price advantage on certain plans (especially Kaiser and Health net)
3. Full range of benefits and options from one provider

We're happy to quote CalChoice along with other carriers (even those that participate with CalChoice).

Just request your CalChoice group health quote here (note current plan, carrier, rate and we'll see if CalChoice is better priced).

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Small Business HSA's and HRA's

HSA (Health Savings Account) and HRA (Health Reimbursement Arrangement) are similar in their intent.

Basically, you combine a high deductible plan with some time of self-insurance for the smaller bills.

For example,

A company may offer a $4500 deductible plan and then contribute $100/month towards a tax-favored HSA account.

The employee can use the $1200 for first dollar coverage and have the $4500 deductible for more catastrophic, bigger bills.

The employer can fund what they want to or choose not to fund at all. The employee can also fund towards the account (up to the annual max) with pre-tax money.

The HSA's are very popular because they combine:

1. Cost savings on the underlying health plan
2. Tax benefits to the funder
3. First dollar coverage for funded HSA account
4. Internal push towards preventative and staying healthy

We can quickly quote the HSA business plans side by side for you here.

HRA's are slightly different in that they combine a high deductible plan with reimbursement for eligible expenses from the company.

Certain carriers such as Cigna provide a full platform to manage the reimbursement with different options in terms of risk.

This generally works best with larger companies but there can be savings across the board.

The benefit is that the company only pays out when there are incurred medical expenses as opposed to the HSA which is pre-funded.

We can quote both the HSA and HRA option for you here:

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Benelect or 3rd Party Administrators

Benelect is an example of a 3rd party administrator.

Essentially, they provide a platform for a fee to "wrap" around a high deductible plan.

A company can take a high deductible plan for the catastrophic bills and then build out whatever benefits they want up to that amount.

This includes choice of:

1. Dedutible
2. Copays
3. Co-insurance

Almost everything can be managed since the company will pay for the designed benefits up to the underlying plan's high deductible and max out of pocket.

Benelect works well in certain situations.

When it works, we see savings of 10's of thousands per year in health benefit costs.

It can be amazing to see the results.

It works really well when compared to richer plans on the market (think Gold or Platinum in the new ACA world).

We can run your Benelect quote quickly here and provide a range of options.

The final proposal will show best case, worst case, and expected performance for your annual health care costs.

It's not unheard of where the worst case still saves against a company's current rates.

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The Mini-Cafe Plan

Regardless of which carrier or option you go with, make sure to take advantage of what we call the Mini-Cafe plan.

Essentially, the company pays a percentage towards a given plan or a fixed amount per month per employee.

The employer can choose to offer dependent coverage or not and if so, at a different contribution level (i.e. 75% for employees and 50% for dependents).

This whole approach is the ONLY way to go and you should all be doing this already.

Why?

It offers the best of both worlds.

The employer is able to lock in the company monthly budget (increasingly important in today's world)

and

The employee is able to pick and choose among a range of plans according to his/her health care needs and budget.

Employees love being able to choose.

Even if the contribution is lower...choice is power to an employees.

How does this work practically?

It's really easy.

First, we generate a report across the market to see which carrier is priced best at a given plan level.

We then establish the company budget.

Here are the options:

1. Fixed monthly budget - better control of cost but penalizes older employees
2. Fixed % across all plans - less control of cost but more fair to all employees
3. Fixed % to a given plan - ideal control of cost and equally fair to employees

Obviously, we have found that option 3 is the favored approach after enrolling 1000's of California companies!

We're happy to get started and run the market comparison quote here.

After your feedback, we can then run the employee worksheets based on company contribution.

You can see examples of both reports:

Market Summary
Employee Worksheet

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Narrow Network Plans

Finally, if cost is actually paramount, all the carriers are offering plans with more narrow networks...both PPO and HMO.

Typically, we'll have the same benefit levels (Bronze, Silver, Gold, Platinum) but with networks that are smaller both in terms of hospitals and doctors.

This can save money for employers and employees.

We generally recommend this for:

employers who will be unable to afford coverage without this option

OR

where the smaller network is not too much of an issue.

There are areas in California where the networks are sufficient in the narrow network plans.

We can help you not only quote both network options but analyze the network differences for your given area.

Keep in mind that Kaiser is Kaiser.

Request your narrow network quote here

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Recap on Group health options

Hopefully, we've shown some options to help address the spiraling cost of employer health care.

We really wanted to share our day-to-day methods to help companies after enrolling and servicing 1000's of California companies since 1995!

If you have specific questions or requests, please call 866-486-6551 or request your quote (with notes of your specifics).

How can we help you save on your group health benefits?

Call us at 866-486-6551 or request your Company Health Quote.