Q4 Benefit Conversations

As the fourth quarter approaches, discussions about insurance renewals start to intensify. Approximately 60% of US employers choose to renew their insurance plans on January 1. Across the board, year after year, advisors are observing a consistent rise in health insurance premiums and renewals. In California, the average renewal rate in the fully-insured marketplace appears to be around 12.1%. This ongoing increase has become an unsustainable financial burden for many mid-sized companies.

It’s important to recognize that the rise in your insurance renewal reflects a broader trend of increasing healthcare costs. Several factors contribute to this upward trend:

·???????? Advancements in Technology: New, innovative healthcare technologies often result in more effective but pricier procedures and products.

·???????? System Complexity: The complexity of the U.S. healthcare system can lead to administrative inefficiencies and increased costs in insurance and provider payment processes.

·???????? Hospital Consolidation: The merging of hospitals can reduce competition or create monopolies, allowing providers to raise prices.

Ultimately, these factors underscore the need for your organization to move beyond the traditional fully-insured approach. This approach often involves negotiating your 10% renewal rate down to 7% by increasing deductibles and raising the cost of primary care visits from $25 to $50. While this might reduce your immediate financial impact by shifting costs to employees—provided it remains within affordability guidelines—it doesn't address the root issues. Alternatively, you might explore other carriers to see if they offer better terms. All while you have no data to support your decision, so when you do decide to stay with your fully insured carrier, you aren’t making a bad decision, its simply an uneducated decision.

It's also important to consider that while you need to manage your budget, shifting costs to employees or implementing suboptimal plan designs primarily impacts your workforce. Over the past five years, the average premium for family coverage has risen by 22%, meaning that employee raises are often offset by increased insurance costs. To attract and retain talent, your organization needs to make more strategic and informed financial decisions. Instead of engaging in annual, transactional discussions with your broker, focus on a long-term financial strategy.