???? Unlock Hidden Savings in Your Fully Insured Employee Benefit Renewals

Preparing for Upcoming Renewals

With renewal dates approaching for many groups on December 1st and January 1st, it's critical to manage your employee benefit renewals proactively. Taking action in advance can help you avoid substantial costs for both your business and your employees. Here’s how you can take control and achieve significant savings.

Unveiling Hidden Carrier Profits: An Opportunity for Substantial Savings

Hidden carrier profits are additional costs embedded within your health insurance premiums that do not directly contribute to the value received by policyholders. By identifying and negotiating these hidden profits, businesses can achieve significant savings.

Major Profit Centers for Health Insurers

1. Shared Savings (1% of Premium): A portion of savings retained by insurers as profit.
2. Capitation (1% of Premium): Margins retained as profit by insurers under fixed payment arrangements.
3. Rx Rebates and Price Markup (5% of Premium): Significant portion of rebates kept as profit by insurers.

In total, these hidden profits can amount to 7% of the premium value, offering a significant opportunity for negotiation.

Impact of Negotiating Hidden Profits

Consider an initial renewal premium of $3,000,000. By targeting and achieving a 14% reduction through negotiation, potential savings can amount to $420,000, reducing the renewal premium to $2,580,000.

The Power of an Integrated Actuarial and Underwriting Team

An integrated team, comprising actuaries and underwriters, leads to holistic and proactive program management. Actuaries certify findings and create tools and models, while underwriters validate pricing and formulas. This collaboration ensures comprehensive analysis and effective management of your employee benefit programs.

Fully Insured Client Renewal: Strategies for Lowering Your Renewal

A thorough review of fully insured client renewals can identify areas for negotiation, leading to significant cost savings. Key points to consider:

• Excessive Pooling Charges: Identify if there has been an excessive increase in pooling charges from the previous year.
• High Retention Rates: Evaluate if the retention rates are too high, even after accounting for ACA fees.
• Excessive Demographic Adjustments: Assess if the carrier has added demographic adjustments that are not justified.
• Credit for Previous Benefit Reductions: Ensure the carrier has correctly credited any benefit reductions from the previous renewal.
• Enrollment Shift Adjustments: Verify that the carrier has adjusted for enrollment shifts, such as from PPO to CDHP plans.

Case Study: Non-Profit Organization Achieves Significant Savings

A non-profit organization with a $2 million premium faced an 18.47% renewal increase. By conducting a thorough review and challenging the carrier's assumptions, we reduced the renewal increase to 4%, resulting in a total savings of $290,000.

Don't Delay, Act Now!

As renewal dates loom, the urgency to take action cannot be overstated. Ignoring rising healthcare costs is not an option. Historical data shows a consistent upward trend, potentially costing your business millions more in the coming years if no action is taken.

By proactively identifying and negotiating hidden carrier profits and leveraging the expertise of an integrated service team, you can stabilize your healthcare costs and ensure more of your premium dollars directly contribute to value for your employees.

If you need assistance navigating these complex decisions, I’m here to help. Together, we can develop a tailored strategy to manage your employee benefit renewals effectively. Contact me today to schedule a consultation and secure your savings before it's too late.

If you're ready to explore how our actuarial services can help your organization, please reach out. Together, we can create a sustainable and cost-effective benefits strategy for the future.