Are You Ready For Higher Healthcare Premiums In 2015?

Healthcare premiums are increasing... no kidding!!, as if we didn't know
I thought the purpose of offering healthcare benefits to employees was supposed to make employers more attractive to employees. That becomes harder as both premiums and out of pocket costs for healthcare continue to rise. Employers need real solutions, because as the premium costs rise for the employees, they rise for employers as well. This becomes an increasingly difficult issue when employers get over a certain size and they are required to offer healthcare by law. The results are in, according to the Kaiser institute, premiums haven risen in 2014 by an average of 4%, inflation rose only 2.18% over the same period according to the Bureau of Labor Statistics. It appears that medical premiums have been outpacing inflation for quite a few years, since 2009 premiums have increased by 18.1% for single coverage, and 18.2% for family coverage, while inflation increased by almost 11%. According to Kathleen Sebelius, premiums will likely increase again next year in 2015, only slightly though, that's encouraging news for employers isn't it? Isn’t this the same person that stated there was nothing wrong with the healthcare.gov website for the first few months it was open?

Out of pocket costs
Not only have premiums increased, but so have the out-of-pocket costs for families and single coverage. Deductibles have increased for employees on average approximately 47%, which is a huge hit to their paycheck, especially when you consider that medical premiums have been outpacing inflation over the last few years, out-of-pocket costs have risen even more sharply. What patients fear most is an extended hospitalization, the CDC reports that in 2010, there were 35.1 million hospital stays with an average of 4.8 days. Kaiser Family Foundation reports that in 2010, the average cost for a 5 day hospital stay was approximately $8,000. The cost of healthcare is being shifted to the patient, when costs rise, consumers and employees are forced to make decisions that are in their own best interest, and aren't necessarily in everyone else's best interest. Those numbers are from 2010, we are currently at a 10 year high for healthcare spending, as demand increases with no change in supply of hospitals, prices are almost certain to increase as well, driving premiums higher.

Choice can be a minefield
When selecting their healthcare options, it can be a minefield, for large companies their HR staff can be over-run, bombarded with questions from employees that are attempting to make the best decision for their lives, but one that also fits within their family budget. The selections of HSA vs non-HSA, $2,000, $3,000 or even a $5,000 (or higher) deductible can make your hair stand up on end. It can be a harrowing, nightmarish experience trying to figure out your budget, working full-time with a family, and having less than 30 days during open enrollment to figure it all out. It's almost like a coach or consultant is necessary to navigate the minefield of options.

Is there a solution?
There is a solution for these problems that has been discussed at large, voluntary benefits. Everyone is familiar with non-indemnity voluntary benefits that pay the employee. In the past, voluntary benefits have not been looked at as being very helpful in lowering costs for major medical premiums. The field is getting pretty competitive, Prudential recently announced they are getting out of the market for employers that have less than 100 employees. There’s a reason for all the competition, they all help with either premiums or out-of-pocket, or both. Almost all of these providers offer some type of accident or critical illness plan that can assist with out-of-pocket costs for immediate illness and injury, while other providers also provide a medical bridge plan that directly lowers out-of-pocket costs, often reducing monthly premiums as well, even with the additional premium. These plans are HSA compatible for hospital confinement, and are non-HSA compatible to cover outpatient surgeries, diagnostic tests, ER & doctor visits. These types of plans can oftentimes bring premium costs down for everyone, keeping out-of-pocket costs down for the consumer as well.

What's the point?
It has already been proven that raising the deductible will lower premiums, but that makes companies less attractive to their employees. Voluntary benefits are an excellent way to increase your benefit offering as they are payroll deducted, and billed in arrears after the deductions have been collected. This gives employers a tax benefit without making any contribution at all, plus they are able to make themselves more attractive to their employees without adding anything to their budget. Some of these companies even offer one-on-one consultation for ALL benefits offered, that's right, you can get that consultant who can help your employees navigate choices for them to get the best quality of insurance without sacrificing their budget.