The Relationship Game

The Relationship Game

Opportunity Cost: the loss of potential gain from other alternatives when one alternative is chosen.

Would something like this be relevant when it comes to Employee Benefits and brokerage selection? Absolutely. There is a running joke in the industry about ‘golf course brokers’ and as with anything comedic, there is an element of truth to the statement. Has your broker ever claimed ‘the market is the market, but we do great work (and/or we are popular), so stay with us’, or that ‘trend is normal, paying more is ok’? If you have heard these statements, the inherent truths are:

  1. The broker is leveraging a relationship over delivering value. The market, strategies, workflows, are NOT the same from brokerage to brokerage. Consider this; is every attorney or surgeon equally skilled? No, of course not. There is a continuum of talent, ability, and efficacy that exists in all professional services. If you believe this doesn’t exist within the realm of employee benefits, then you may benefit from a 2nd, 3rd, or 4th broker opinion. Truthfully, the most talented consultants will not give their secrets away to non-clients, and why should they? Would you see a Dr. and get his or her advice and then tell another Dr. who is your friend that they should treat you with that treatment plan? Would you refuse to pay the Dr. that gave you the best advice? Of course you would not. This happens all the time in employee benefits, but it isn’t justifiable or ethical.

  2. Sure, pharmacy prices rise, and medical technologies MAY constitute higher prices for these services, but should you pay more for ‘industry trend’? Trend is a fancy way of saying, ‘we cannot identify where your dollars are going, but healthcare costs a lot and you should pay more each year’. Is that acceptable in the remotest way? No, it isn’t. Know your data and control your risk. Find an advisor that is obsessed with transparency and a better future for all. Only then will you know that you are paying the appropriate amount for premiums.

If you noticed that most of this post is NOT addressing the relationship between company and broker, you picked up on an important fact. Relationship does NOT supersede value. If a broker that is inherently aligned with a positive outcome for your business approaches you, have a listen. Put another way, have you ever wanted to pay $50,000+ per year more for worse coverage just to be ABLE to shake someone’s hands once per year? Is their handshake worth 50k?

Like your broker, but DEMAND value first. Your P&L will thank you. Your staff will thank you. Let the best Consultant WIN your business and don’t be afraid to hire someone that can perform better for your company and staff.

Pay for Performance

Pay for Performance

Imagine only paying for a service if a vendor saves you money on the front end. Wouldn't that be nice? The truth is, this is not only possible with a health plan, and a benefits advisor for that matter, but the message hasn't been shared widely enough. Programs exists, especially in the self-funded arena, wherein clients see real dollar savings and remit a portion of this back to the vendor that executed the solution on their behalf. There are several areas in which this is possible:


In self-funded health plans, and by virtue of working with independent TPA's, employers can elect to work with transparent pharmacy benefit managers that significantly reduce the price of prescriptions for members. Imagine 30% or so of your claims dollars being cut by 70% in total costs....would this be a considerable savings in your health plan? Yes, of course it would be! What's more, the price of the prescriptions for the members that use the health plan is also reduced, and can be eliminated altogether depending on the structure of the plan and how the employer would like to incentivize the employees. If diabetic medication adherence has caused costly claims to arise, it may be wise for the employer to cover the maintenance costs of diabetic treatment entirely.


Bundled surgery pricing has increased in popularity lately, and there are even technology platforms available that let physicians bid on procedures from across the country to create more competition. We know that market competition drives prices down, and this is true also when it comes to healthcare. Not only can this lead to better outcomes by choosing providers and facilities that have stellar track record, but it also lowers costs for the member AND the health plan. Again, because spend is a factor of claims, bundled surgery pricing and market competition create an advantage for savvy employers.

Case Management

Hindsight is 20/20, and many brokerage houses are used to reviewing past claims data in pretty reports and use them to justify a renewal increase or that they have an eye on plan performance. A better approach is to have the health plan engage members at time of diagnosis to assist them in their healthcare journey. Case managers can be instrumental in assisting employees when it comes to navigating the system and can also help the health plan by steering members to high-quality providers and facilities that may also help reduce claims. The best approach is to have a health plan partner that works to proactively engage members that may be at risk for specific illnesses given the fact that a large percentage of claims are avoidable and due to lifestyle-related choices. Your cost curve is bent downward with a proactive approach.

Telemedicine/Health Advocacy/Decision Support

Members that use telemedicine for minor illnesses save health plans money every time they use the service. In instances of high adoption and an engaged employee population, a health plan can see considerable reductions in their office visit claim charges. Because of the low cost of telemedicine, it is easy to have the cost of the program justified, and members get a $0 copay as a result (for many plans).

If an employee receives an EOB they don't understand or need help comprehending their benefits, they can reach out to a healthcare concierge for assistance. These professionals can help negotiate bills, find errors, and more when a member has a healthcare event. Your HR department is not inundated with claims and plan calls, and members get a high level of care and support. Because of the service's ability to reduce claims after the event and help members avoid more costly treatments prior to the event, health advocacy again saves real dollars for the employer and provides members with personal support. At times, this service is included as a value-add from a carrier partner.

Decision support tools can help members estimate the costs of care and steer them to network-vetted facilities and providers that have below market pricing. By enabling the members to become healthcare consumers, they spend less, and the health plan also benefits. I feel like a broken record at times with this message, but all these services reduce claims. Lower claims equates to lower healthcare spend for the members and employer.

In Closing

Your health plan is an asset, but if it is considered as a liability, the only metric that is measured will be premiums. If the conversation is premium driven, then the employer will be stuck shopping for cheaper insurance every year, but we know that costs continue to rise and that carriers act very similarly when rating cases (why do they ask for the renewals, you may ask?), so this approach is inherently flawed. By investing in the health plan as you would a workplace safety program (to reduce worker's comp), or a maintenance program for your technology (to ensure your equipment is performing optimally and for as long as possible), an employer can finally see that programs that appear to be 'additional cost' can be the very solutions that lower their costs in the end.

Market Position

Market Position

“Insanity is doing the same thing over and over again and expecting different results”. -Albert Einstein

Why begin with a quote like this, you may wonder? Because the unfortunate reality for so many employers has been to repeat the same process every year or so and expect different results (long-term savings). Of course, there used to be a limited set of options for small and mid-sized employers when it comes to group medical benefits, but today, there are hundreds of smaller health plans that still rate companies based on health status. The reason this is important is because ultimately, the only way to reduce costs long-term is by having low claims. Of course, there is general trend in the market that employers of all sized have to content with, but when we see the initiatives of jumbo employers being aimed at reducing claims, we know there must be something to it. Employers proactively spend money on programs in an effort to reduce current and future claims, which of course, is a good thing. Smaller organizations can, and should, do the exact same thing by working with brokers that have the ability and wherewithal to apply these principals to their group of clientele. All of this makes perfect sense, but the reason so many groups may still be quoting and praying for lower rates each year is due to how the brokers they work with operate. 

It is, of course, the easiest thing in the world to just do what is working and not make changes. You may agree that truly innovating takes a tremendous amount of thought, planning, and execution, so a limited set of brokers are used to doing this on a regular basis. The old brokerage model of quoting the same set of carriers each year and providing adequate service is simply not enough any more. The conversation must be dramatically different, and while change can be perceived as difficult, it is necessary to combat the ever-escalating premiums that many are facing each renewal. Is your current broker innovating for you?

Another reason why many employers are still stuck in a cycle that doesn't work is because the largest, most sophisticated brokerages simply do not work with this set of employers. If an employer demands on-site guidance, a meticulously planned renewal season, expansive marketing, brilliant employee communication materials, actuarial and legal support (as needed of course), and intense rate negotiation, their best option is to work with a boutique or regional brokerage that can deliver this hands-on approach. Smaller brokerages have to work efficiently, and that means leveraging external resources to the benefit of their client. For example, by working with General Agencies that are paid directly by their carriers, a boutique brokerage can feature legal, actuarial, human resource, technology, and other resources without additional cost. A trickle down effect is that a boutique brokerage may charge less in commissions to account for this reduced overhead, which means a direct savings for the client. 

Good is the enemy of great, which is why there are so many 'good' brokers out there and a very limited subset of 'great' ones. Prosperity Benefits is committed to exceeding expectations and providing clients with excellence, which we hope you agree is a standard that you can enjoy getting used to. A byproduct of this disposition for clients are the most cost-effective, well-communicated, compliant benefits plans that are designed future success in mind. 

2018 Trends

2018 Trends

It should come as no surprise that carrier, plan, and policy changes come yearly in the individual market, but in the group marketplace, you may find it interesting to note that the biggest concern is still controlling costs for many employers.

Recently, a major carrier decided that the individual market was not going to be viable for them in all but the most rural 85 counties in GA and as a result, people living in populated areas of Georgia have to go to the federal exchange to find options, even if they don't qualify for a subsidy. This is a big change, and it severely limits options for those that do not have employer-sponsored coverage. For small companies that are considering abandoning group plans, citing cost increases are unsustainable, the individual market may not be as appealing as it once was due to lack of competition and options. We work with even the smallest of companies to help them ensure they have the most cost-competitive plans in-force, but for employers with over 50 employees, the challenge is a bit more daunting. 

The National Business Group on Health cites providing medical and pharmacy benefits has gone up again another 5% for 2018, which means employers have to concentrate even more to maintain competitive programs without shifting too much cost, stripping benefits, or plan design changes. Though a mixture of some of these more traditional strategies may be an optimal fit for some groups, many have recognized they need to embrace emerging trends to outpace and even counteract increasing costs. Here are some of the most popular trends in cost-containment for 2018 according to the report released from NBGH: 

  • Telehealth--For years, Prosperity Benefits has advocated the use of telemedicine, for many reasons, but it is an efficient vehicle to control costs for the employees but also to reduce plan claims by transferring the provider charges to the telemedicine service. Once seen as an 'add-on' cost, telemedicine struggled to be fully understood. Many carriers have embraced the trend and promoted it to their members because it makes sense even for the insurance companies to use the technology to reduce their costs too. For employers, understanding the savings is straightforward:
    • When an employee uses the telemedicine service, provided by a third party, non-insurance carrier especially, the claims burden is either entirely shifted or reduced significantly. An employee is speaking with a physician that is contracted by and paid by the telemedicine company, NOT YOUR PLAN. Removing these charges has a direct impact on the claims experience of the group. This strategy, when utilizes regularly by your insured population, helps to lower plan claims, which either immediately reduces costs or does so in the future (lower renewals). 
  • ACO's and High Performance Networks--Well, the path of entry to these networks is typically found through self-funded plans, but they, too, offer cost-savings and even improved outcomes. In an Accountable Care Organization, physicians are compensated for quality of care and positive outcomes rather than number of procedures performed, supplies used, tests ordered, etc. Under this model, efficiency is rewarded, which again equates to lower claims long-term and in the short-term as costs are significantly reduced by virtue of the structure of an ACO. High Performance Networks may offer lower discounted pricing for members, which again means lower claims for the employer sponsor. Sometimes, HPN's can also offer lower copays and deductibles for members at time of service, which reduces also the burden on the insured. The more the HPN is used, the more the employer and the employees save on costs. 
  • On-Site Clinics--For employers with over 200 employees in a single location, it may make sense to have an on-site clinic available to staff several times per month. On-site care provides lower, controlled costs for routine health maintenance and even one-off services like vaccines, wellness exams, or sick visits. Because on-site clinics merit a charge that is separate and distinct from the medical plan (as long as it is a third-party), group claims are lowered. What's more, due to the fact that your staff don't have to schedule time at an office off campus, they are able to spend more productive time at work. When one considers convenience as well and that some employees may not have gone to receive care at all if it wasn't on-site, employers also reap the benefit of reduced absenteeism and enhanced adherence to medications and periodic care. 
  • Centers of Excellence--In similar vein to HPN's, COE's offer savings with pre-negotiated pricing for employers for procedures like transplants or orthopedic surgery. Again, lower pricing means reduced claims!
  • CDHP's--Making employees healthcare consumers is not a new idea, but more and more employers have adopted at least one CDHP option. These are typically paired with Health Savings Accounts and many times with an employer contribution to incentivize participation. With these plans, because the first dollars of expense are paid by the employee, there is an immediate reduction in plan spending. Due to the fact that HSA accounts have retirement planning benefits as well, they make sense for employers to offer their teams. 

The information listed was derived by a report in which approximately 100 of the Fortune 500 and Global Fortune 500 companies participated. 42 of which belong to the Fortune 100. It is important to pay attention to jumbo employer trends because they typically have the most resources to devote to structuring well-balanced and cost-optimized health and welfare plans. Prosperity Benefits scales these solutions, where appropriate, to smaller employers, making an impact that is measurable quantitatively and qualitatively. 

Renewal Planning

Renewal Planning

Have you ever been stuck with a double-digit renewal increase without any time to do anything other than increase your deductible and lower other benefits just to keep costs in line? This is a frustrating situation, but can be avoided with the proper pre-planning. Our industry does not have benchmarked 'norms' to which brokers must adhere, so more often than not, a carrier's renewal being sent is the impetus for a broker to begin working on a clients renewal. Some carriers send this information out more than 60 days prior to the policy anniversary, and that may be enough time for a small company to contend with the renewal, but employers with over 50 staff need more time to execute the renewal properly. We approach renewals in a systematic way: 

Small Groups

When the renewal is received, the client is contacted to discuss the findings. If the client would like to see alternative options, the group is marketed immediately and quotes are presented within 2 weeks. We then work together to finalize our direction for the next year and have the staff fill out an online health form or their plan election. Installation is completed approximately 20 to 30 days prior to the renewal so that ID cards are in hand by the effective date. 

Groups over 50 Employees

Planning starts well in advance of the renewal. We begin a discussion approximately 4 months prior to the renewal to reveal any faults within the carrier choice, plan itself, cost concerns, service issues, etc. We establish a timeline to which both sides must adhere so that the renewal can be cleanly executed. Generally, renewals are available closer to 3 months prior to the renewal, but census and plan data gathering takes place prior thereto. We keep a running census on-file for the client, so marketing the plan happens very quickly with little effort. Options are gathered, vendor negotiation ensues, and options are presented to the client between 2 and 3 months prior to the renewal. We discuss any newly desired initiatives (wellness, worksite, benefits administration technology, on-site orientation, ets.) and select a carrier for installation. ID cards are delivered at least 2 weeks prior to the renewal. 

Time of Year

It is important to realize that carriers are the busiest on the 12/1 and 1/1 renewal periods, so even more time should be allotted for clients that renew their policies on those dates. For some groups, because they have the ability to keep their deductible resetting on 1/1 regardless of their plan anniversary, they like to move their renewal off of these busy dates so that they receive more timely carrier replies and perhaps more favorable results. 


We work with each client to ensure they are satisfied with their renewal process and welcome feedback as to how it can work better for them or other client organizations alike. Prosperity Benefits, LLC believes in improving the renewal process for all newly transitioning clients. 

Benefits Trends

Benefits Trends

In a recent publication by Benefitfocus, a benefits administration system that caters to large companies and carriers alike, employers in the South are demonstrating the below growth in the areas of HDHP's, voluntary benefits, and deductible increases:

  • 54% growth in high deductible health plan offerings
  • 11-15% increase in PPO deductibles
  • 49% increase in voluntary benefits offerings and a 208% increase in participation on those types of plans

This data was extracted from 504 large employers that each have more than 1,000 covered employees, but the more interesting story is behind the numbers. As healthcare costs continue to rise, so do premiums and claims charges. Large employers are a great reference point as a benchmark as they have been working for years to control costs and create favorable benefits environments for their staff. These groups also have sophisticated solutions and teams of individuals who are charged with the task of competitive program design, premiums, offerings, operations, claims-reduction strategies (wellness and more) and many more aspects within their health and welfare plans. Evaluating this data is important in learning what trends will trickle down to smaller groups in the future and what innovative employers can do today to make their programs better.

High Deductible Health Plans create healthcare consumers out of workforces because the first dollar responsibility is typically that of the covered employee. When this burden is placed on the employee, they tend to make better purchasing decisions when it comes to basic and even complex care. Many carriers have decision-support tools on their sites that assist members in their search to find quality, well-priced care. When one considers that over half a given population only has a minimal amount of claims in a given year, it makes sense to offer a HDHP for the below reasons:

  • Typically lower premium versus similar deductible copay plans
  • HDHP's inherently control unnecessary or high-dollar expenses by design
  • By offering an HDHP, an employer is mitigating their claims risk by placing the first dollar burden on the employee. This shift leads also to better decision-making and involvement at the employee level, which is also positive.

Increasing deductibles is nothing new, but employers in competitive industries may find that performing a benchmark study of peer companies may help them to create a benefits plan that is more appealing to the audience of potential employees that are evaluating many companies within a specific area or trade. Many carriers offer reports of this nature, as to industry-specific third party organizations.

Voluntary benefits have been on the rise for years, and we can see that when offered, employees not only appreciate the gesture, but purchase the coverage that suits their needs. Offering new products can seem a daunting task that involves creating marketing material, disseminating the new offering to the staff, enrolling (paper-based, electronically, person-to-person, etc.), uploading the data, and then managing the plans thereafter. Of course, there are many steps to consider and each employers situation may call for a different plan of action. It is important to work with a Consultant that has varied methods of implementing voluntary benefits plans to ensure your staff have their needs met.

One of the many solutions Prosperity Benefits offers is that of a benefits portal that helps to educate, enroll, and service staff year-round. This experience is akin to online shopping and is extremely intuitive. When this method is used, collecting and exporting the data is a breeze and the enrollment is performed automatically with the carriers.

Prosperity Benefits can help you stay on trend when it comes to benefits by scaling large employer strategies downmarket.

Controlling RX Spend

Controlling RX Spend

Employers are concerned about what the AHCA will do to their premiums, benefit plan structure, compliance procedures, and more, but many can benefit by having a concentrated look at what they can be doing to address their current costs. Pharmacy, in particular, can be responsible for up to 30% of claims costs, and yet it is often overlooked as an area of potential savings. Of course, employers would like their staff to have access to the medications that they need, but it is also imperative to focus on ensuring this spend category is well-managed and that costs are kept in check while ensuring staff obtain what they need to maintain their health. 

  • Know your numbers: By analyzing what percentage of your prescription drugs are in the various tiers of generic, preferred and non-preferred brand, and specialty/injectable medicines, an employer gets a better idea of where their dollars are going and where to focus concerted efforts. It may come as no surprise that the dollars allocated to each tier may be largely the same. Because specialty medications are so much more costly, one specialty medicine per month may equate to 20 generics being filled. Identifying your expenses is the first step to cost-optimization. 
  • Employee education: Even if information about your dispense rates and percentages is not made available by your health plan, educating the staff is an easy and effective way to ensure they are aware of the most cost-effective ways to obtain the medicines they take on a regular basis. 
    • Preferred pharmacies
    • Mail order
    • Discount programs (GoodRX may be cheaper for specific medications versus having insurance filed, for example)
    • Considering generics
  • Specialty drug focus: For those members that require specialty medications, it may make sense to have them in touch with a case manager to help them manage their condition in the most cost-effective way. Many pharmacy benefit managers have dedicated pharmacists that can help work through issues with their higher utilizing members. Designated pharmacy care may also provide a more hands-on and direct regimen of care for the covered member, which can help them live a healthier life. 

There are many ways to combat ever-increasing costs for specialty medications in your population. 

Claims Transparency: Is it an oxymoron?

Claims Transparency: Is it an oxymoron?

There is no doubt that our healthcare system is currently structured in such a way as to be confusing, expensive, and extremely complex, but why should the average person or employer care? Because we are the ones that pay for the broken system! One of the reasons why we don't pay attention to provider and facility charging practices is because we have been conditioned to think it is complicated, which it is, but let's put this same methodology into another field to see if it makes sense:

You walk into a car dealership and ask the price of a car that has no sticker on it. The dealer then asks you for your W-2 to see your ability to pay and then works backwards to come up with the price. This isn't fair, right? Agreed, but this is exactly what healthcare facilities do; ask about your insurance carrier first and then see how much more they can charge over the medicare reimbursement rate as a result. This is how our system has evolved since PPO's entered the market decades ago.

The facilities can't really be blamed for this either though because, in general, they don't compete on price. This is understandable because healthcare is a very personal service and because the member is usually only exposed to their deductible and coinsurance amount, they don't have a reason to think critically about where to receive care. We want to know that those that care for us are fairly compensated for their expertise as well. The concept of Accountable Care is another topic that can be expanded into a novel, but let's stay on point for now. The problem is that employers, by far the largest medium through which Americans receive health coverage, are forced to pay the ever-higher trending costs of care, which then trickles down to the employees by way of increased cost-sharing and decreased benefits. There is not a simple solution, but there are creative ways to mitigate these costs for employers.

A novel trend in group benefits is the practice of reference-based pricing. Payments made to facilities and providers are based on a percentage of what Medicare reimburses them, which may be enough to cover costs, and a PPO network is circumvented. Because PPO networks average nationally around 260% of what the Medicare reimbursement rate is, there is ample room for savings. Given a reimbursement rate of even 130% of Medicare cuts claims costs by 50% for an employer that is directly responsible for the cost burden of their staff (directly if self-funded and indirectly if fully-insured). What's more, PPO networks have fees associated with them that can be $12 to $20 per employee, per month, making the proposition of using a PPO network more costly still, through administrative fees that is.

Many health plans have adopted reference-based pricing for groups as small as 10 employees that choose to self-fund their benefits plans. What this means is a direct savings to the employer when it comes to claims and administrative network fees, which may come as a relief to small groups that are used to seeing 10 to 20% increases or more without a remedy to lower costs.

In sum, reference-pricing may be an attractive strategy for many employers and employees. Though each case is unique, we can all agree that more transparency and lower costs for healthcare is a step in the right direction. Prosperity Benefits delivers a data-based health and welfare evaluation to ascertain if a referenced-based pricing benefits plan is an appropriate fit.

This idea and others are examples of how Health and Welfare Consultants can differ dramatically in the value that they provide. Intellectual capital is how brokers differ from each other. Have you been presented any great solutions lately?

RX Underwriting

RX Underwriting

Several things are true about underwriting: 

1. Typically, it is the best way to achieve the most advantageous rates in the market for small and mid-sized groups. 

2. It allows access to data, which is important in identifying where the risk lies in your group and what strategies can be used to help mitigate those potentially catastrophic future claims. 

3. It can be like herding cats to have staff fill out applications...!

While Prosperity Benefits uses FormFire in an attempt to streamline the underwriting process for employers, there is an even easier way for groups that have more than 20 enrolled lives on their health plan and it is RX Underwriting. 

This concept is not brand new, but several carriers have now adopted the approach of offering FIRM rates to groups that are able to supply names, dates of birth, genders, and zip codes for all those employees and dependents that are covered on a health plan. Using this method, the employees are removed from the underwriting process entirely and may simply then make their elections based on the firm rate offer. 

RX Underwriting is not without inherent flaws, but with several of the most competitive carriers in the small and mid-sized group markets using this approach, it is wise to follow the trend as long as it is possible. 

Wholesale v. Retail

Wholesale v. Retail

Common sense lets us know that purchasing at wholesale rates is a better buying decision versus paying retail, but when it comes to health insurance, what is the distinction? Many small and mid-sized employers don't realize that they purchase at a retail level, and their premiums are allocated mostly towards claims and administrative costs, but also to reserves, profits, taxes, and more. How can these organizations move towards a more transparent model?

For years, Prosperity Benefits has advocated level-funded healthcare plans, which is a form of self-insurance for group benefits. The results for these employers that have been used to paying retail rates is dramatic in terms of cost savings, and many never even realized there were alternatives to the retail purchasing market. As we know, some groups are not able to take advantage of the wholesale model because it requires a company be generally healthy with a claims risk that is commensurate to what their level-funded plan believes they can cover with the claims fund in a given year. Generally speaking, there are 3 buckets of costs that go into a level-funded healthcare plan: claims, admin, and stop loss. One third of dollars are used to fund claims expenses, but if they are higher than anticipated in a given month, the stop loss carrier will cover the difference as that is an insurance policy provision that is included in the structure of the level-funded healthcare plan. If the claims are higher than what the carrier anticipated they should be, then the stop loss will cover the overage, meaning the employer doesn't have to come out even a dollar over the claims fund. The 2nd bucket of funds covers administrative costs that include processing claims, renting the network, customer service, technology portals, broker commissions, and other costs. Lastly, as alluded to previously, stop loss is purchased. Stop loss is insurance that protects the client from catastrophic or unanticipated claims that exceed the predetermined claims fund amount. In all, with apples-to-apples coverage, employers can expect to see 15% or more in savings using this model.

Many employers believe their workforce would not be healthy enough to qualify for a level-funded or self-funded arrangement, but that is where underwriting comes into play. Prosperity Benefits uses FormFire to collect the health risk demographics of your group if they are not available from the carrier (for groups under 125 enrolled lives). Underwriters can accurately define the anticipated risk from the group. Some carriers offer RX underwriting, meaning employees don't have to fill out health statements at all for firm rates to be released! The market for small and mid-sized companies has changed dramatically in the past several years, opening savings opportunities that were traditionally reserved for much larger companies.

Buying wholesale; making sense yet?

The American Healthcare Act

The American Healthcare Act

Of course, everyone was expecting a complete repeal of 'Obamacare', as it is so endearingly referred to by many, but how is the American Healthcare Act measuring up so far? As with any new legislation, the process is not cut and dry. We are able to identify several key provisions, listed in brief below, that will directly impact employers, employees, and individuals. 

  • The employer and individual mandate penalties would be eliminated for 2016 and later years. Those that choose to forego having health insurance can be charged up to a 30% premium surcharge beginning as early as 2018. 
  • Most, but not all, of the assessments, fees, and ACA taxes will be eliminated.
  • The 'Cadillac Tax' that was to begin charging employers an excise tax of 40% for high-cost employer-sponsored coverage is delayed until 2025. Applicable employers must have health coverage that averages less than $850 per month for individuals to avoid this tax. Luckily, most small and mid-range employers have costs that are well below this threshold. 
  • Refundable Tax Credits for Health Insurance: Those that are not eligible for Government or Employer-sponsored healthcare coverage may receive 'advanceable', refundable tax credits for state approved major medical health insurance and unsubsidized COBRA coverage. Under age 30, the credit is $2,000, and $500 per decade is added to that sum up to 60+ wherein the maximum becomes $4,000. Those earning 75k individually or 150k jointly lose $100 for every $1,000 of earnings over those thresholds. 
  • What stays: 
    • Most of the ACA plan design mandates. 
      • Plan Eligibility to age 26 regardless of status
      • Ban of lifetime and annual dollar limits
      • Ban on insurers charging more or denying coverage for pre-existing conditions
      • Caps on out-of-pocket qualifying expenses 
      • Essential health benefits

Best Practices

Best Practices

Prosperity Benefits has ascribed to the belief of learning from the best in the industry when it comes to benefits program design, management, analysis, and execution. There is a quote, "somebody else has said it better", and crossover exists when it comes to benefits as well. A survey of jumbo employers with 20,000+ employees was done in an attempt to learn what they were doing successfully that allowed their healthcare costs to beat trend increases, maintained lower rates with comparatively richer benefits, and kept focus on quality and engagement. Small employers can adopt some of these same strategies to achieve similar successful results. The cost savings over time by saving a percentage point or two here and there adds up to dramatic differences. Here are some areas of focus:

  • Offer a HDHP--When employees become healthcare consumers, they are smarter when their dollars because typically it comes first out of their own pockets in larger amounts versus a traditional copay-style plan. Some employers take a percentage of the premium savings associated with HDHP plans and offer either an HRA or HSA contribution to as to lower the cost burden for the employee and offer another employee benefit at the same time.
  • Incorporate Technology--Making benefits more accessible helps employees to be more educated about their options, which can lead to better financial decisions when it comes to purchasing their core and voluntary benefits. Benefits Portals also include wellness plans, healthcare concierges, integration with fitness wearable devices like FitBit and Jawbone, and incorporate Telemedicine. Prosperity Benefits offers Maxwell Health at no cost, helping employers move towards this initiative without increasing costs.
  • Surcharges--Employers can choose to charge more for tobacco users and those that wish to not participate in wellness programs. Of course, this can give mixed feeling to employers and employees alike, however, the purpose is to drive healthier lifestyles and behaviors, which is for the ultimate good of employees and the company alike. Healthier workforces means lower frequency claims, resulting in lower spend overall.
  • Data Analysis--Knowing your cost drivers is imperative to understanding your population's risk profile and what measures can be taken to mitigate unnecessary spend in the future. Those with co-morbidity risks should be put in touch with a case manager for their conditions. Many carriers offer this in-house, included in the cost of your premium. The employee receives personalized care and work towards better health.
  • High-Performance Networks--This is a newer trend in the market and can result in considerably less spend when it comes to claims. High-performance networks boast deep discounts, making the effective cost of services less. Employees pay less, as do employers. Access to these networks typically comes in a self-funded environment and in connection with specific TPA's.

Best practices help to lower your expense burden within your health and welfare plan. If you are tired of spreadsheeting every 12 months with your broker, we can put you on a multi-year path towards a truly industry-leading health and welfare program!

Population Health Management

Population Health Management

Is this a familiar story?

Broker enters, 2 months or so until the renewal and says "your carrier awarded you with a 15% renewal increase, but we got them down to 7%". Of course it sounds amazing that the broker was able to cut the renewal in half, but is that all there is to the story? Some brokers would showcase that they reduced your renewal by 50%, but does that number really mean much?

When it comes down to it, without analyzing actionable data, we don't know if 7% is a fair offer. Chances are, even a 7% figure may be too high. Competing carriers may be willing to come in even lower than your renewal offer; imagine that. Your company can explore self-funded options and end up paying less than even the prior year! Prosperity Benefits oftentimes can 'rewind the clock' for new clients, setting their premiums at much lower levels. We then work to manage your costs going forward. Most times this is accomplished by analyzing data and introducing new initiatives that are not 'old hat' brokerage offerings.

Whether a company is fully-insured or self-funded, above 50 eligible employees that is, they end up paying for their claims in the premiums that are remitted to the carrier or dispersed from their claims fund. Ultimately, if a company has high claims, they will be forced to pay more and more each year. The only way to stop the cost bleed is to take charge of the situation through managing the population's health. What companies must do is identify the health trends within their group and actively work to reduce their risk profile by educating employees, modifying plan designs, cost-shifting, and introducing financial instruments to help employee out-of-pocket costs. Obtaining this data is the tricky part, but Prosperity Benefits has access to all client medical history information regardless of group size due to our established workflow and integrated technology. If an employer is an optimal fit for level or self-funding, we can clearly see that in working with the company in a transparent way. Enter population health management.

Population Health Management is not new, and yet many companies neglect to incorporate these concepts into their healthcare plans even though the long-term benefits are overwhelmingly positive. If a company can outperform trend when it comes to their healthcare spending, then they are ahead of their peers. Here are some basic tips:

  • Create a Dedicated Team: Working with a Health and Welfare Consultant that is dedicated to the success of your program is critical, but so too is making sure you have appointed individuals to be the catalyst for change within your organization. These team members can work with your staff to create enthusiasm and encourage participation in healthcare consumerism and wellness.
  • Analyze Your Data: Without credible data, it is almost impossible to improve upon your position. Working with a Consultant that has access to mining these data points and making sense of them is imperative.
  • Making the Data Actionable: Once you recognize where your dollars are being excessively spent, it is possible to modify your plan to trim the waste where possible. Did you discover your generic fill rate is too low? Perhaps working to lower the copay for generics would be a wise approach.
  • Think Long-Term: More data leads to more credibility, but it is important to also create a multi-year plan to implement changes to your program in such a way that they can be well-adopted by the staff. Companies that either put too many new initiatives to the workforce or dramatically change how their healthcare plan works can find that their efforts have a negative effect on the program. Focusing first on the most financially stressful areas of expense on your plan is a great place to begin.

In summary, a quote from Sherlock Holmes in the 1800's still rings true today: "It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts." Data is king, and unlocking it within your healthcare plan can be a quick process with the right Consultant partner. 

Let's Wait and See What Will Happen With The ACA

Let's Wait and See What Will Happen With The ACA

Fear can be a strong motivator, but is it ever best to be solely led by it? Can company leaders make sound decisions by avoiding issues or just 'waiting things out'? It isn't likely. Decisions based upon evaluating marketplace data, responding to existing ACA mandates, and defining objectives with a transparent health and welfare professional is always the most prudent course of action. Do nothing and pay more is not a strategy Prosperity Benefits would recommend.

Let's consider the principal of opportunity cost in a typical scenario. Employer XYZ has had the same healthcare plan for years and is advised year after year to 'keep what they have' by their broker. The broker knows that as long as they provide adequate service and keep their same medical plan that the client will not likely find a reason to hire another consultant. For the broker, this is a great scenario as they have used fear as a motivator to make the client think changing may be the worst thing they could ever do. Employer XYZ, unless they listen to other, more compelling and logical approaches, may think they have the best plan because it is 'grandfathered'. Whether the plan actually is or isn't grandfathered is another conversation altogether. We are looking at the issue of Opportunity Cost for this employer in that they will voluntarily choose to forgo savings, plan improvements, wellness initiatives, carrier negotiations, or general program enhancements for what they believe is already the best course of action. Employer XYZ has been conditioned to be afraid of change, so they pass up the opportunity for something better.

The truth is, many positive changes in the marketplace have occurred as a result of the ACA. Regardless of what happens in the future, it is always the absolute best course of action to ensure health and welfare plans are benefit, compliance, technology, and most importantly, cost-optimized for the organization for the upcoming period. Every 12 months brings an opportunity for improvement, but it is wise to adhere to a multi-year plan that is designed to help an employer beat the medical trend when it comes to price increases. Our carrier partners have become increasingly more creative in the small group market especially by scaling down self-funded solutions to help companies that are in general healthier than their peers. If a company is healthy and has young average age, they can enter the self-funded market and save between 15 to 40% or more on premiums. These are incredible savings for employers and this industry has boomed in part due to guaranteed-issue fully-insured premiums rising year after year. Prosperity Benefits is led by a Certified Self-Funding Specialist, and has worked to transition dozens and dozens of companies to this structure. Of course, each client has a unique set of needs and self-funding may or may not be the best option. The difference is, we will advise you using actionable data, not vague objections regarding the validity of either approach. "Self-funding is risky" is a phrase many uneducated consultants love to use.

Ultimately, each company must decide if they believe they are getting the best advice and are making the best use of their dollars by analyzing real data. Those stuck 'waiting' on ACA changes may find themselves paying thousands or hundreds of thousands more than they should in medical premiums in vain. "Let's wait and see" is not a winning attitude when it comes to managing the 2nd highest employee-related expense item in a company!

Tech Brokers: Caveats

Tech Brokers: Caveats

Of course, technology is a great thing to introduce to benefits programs, but it must be done so in a way that core brokerage competencies, services, and industry knowledge are not sacrificed. This article, here, illustrates how one of the largest tech brokerages is moving in a direction to even further bolster their technology position by hiring a CEO that has little to no risk management background. It may be worrisome to consider the 2nd highest employe-related expense item is being entrusted to a 'brokerage' that focuses first on technology and then insurance as an afterthought. For small business owners that have put so much into growing their companies, this should be a very important item to consider before hiring a technology firm as the Broker of Record.

Prosperity Benefits is primarily a Health and Welfare Consulting Firm, but we also have an intense focus on technology that enriches our client's programs. What's more, we are absolutely transparent about our operating costs in providing the software. Our partner, Maxwell Health, recognized that small and medium-sized employers require a level of hands-on benefits expertise that they simply cannot get in working with a technology firm, so they partner with insurance professionals directly to reach the employer market. This approach, of course, allows companies to have the benefit of technology only after the insurance programs are properly set up, managed, and kept in compliance.  A great question to ask a technology broker would be, "how will you manage my costs long-term without just promising to quote every year?". It would not be a surprise if they were not able to answer this question.

One can argue that the biggest issue with technology brokers is that they are focused more on making their technology work, and making it visually appealing, versus spending time learning basic tenets of insurance and benefits risk management principals. For example, if a technology broker cannot figure out how to integrate an FSA within their portal, they may not even have that conversation with their prospects or clients. If there is a carrier that has extremely competitive rates, but doesn't integrate with their platform, would it come as a surprise that they wouldn't recommend that carrier? If the technology broker has a carrier relationship that works, but a better vendor is out there for the client, how can the client know there is another solution? Working with an independent benefits brokerage continues to be the industry standard. There is a measurable cost, an opportunity cost, that comes in working with a technology broker that also happens to sell insurance.

Private Exchanges & Shopping for Benefits

Private Exchanges & Shopping for Benefits

Private Benefits Exchanges help employers to control their budgets while offering a more robust array of benefits to their staff. What makes this approach possible is sophisticated software, like Maxwell Health, and a benefits consultant that can help strategically position employers to adopt this structure while effectively communicating the improvements to their staff. Of course, with any major change to benefits programs, educating the staff is critical. Oftentimes, the adoption of a private benefits exchange strategy allows employees to invest employer dollars where it makes most sense to them, meaning it is a positive change. For example, let's say an employer is used to sponsoring employee only dental, vision, core life, and both long and short-term disability to their staff, or even a combination of partially paid dependent coverage on some of the coverage lines. Some staff may prefer to have dental through their spouse, or perhaps they don't need short-term disability because they have robust savings. This employee, however, may have a need for benefits like accident or critical illness. With the private exchange strategy, this employee can choose to divert more employer dollars towards these other products to more effectively complete their personal risk management profile. Because each employee's needs are different, the private exchange model makes a great deal of sense. Employers benefit because they are able to maintain their budget easily from year to year while not stripping benefits for staff. With a diligent broker negotiating on the employer's behalf and recommending carrier changes when appropriate, it is possible for companies to adopt this approach as a long-term cost control strategy while also enriching the benefits program for the workforce. Win-win. 

The Affordable Care Act and Your Company

The Affordable Care Act and Your Company

There have been changes for employers large and small, but many agree that the Affordable Care Act has come with negative and positive consequences. Two components that have impacted employers with over 50 full-time equivalent employees are: A. providing minimum essential coverage to those that work more than 30 hours per week on average and B. ensuring that coverage meets affordability guidelines. In terms of additional reporting, employers in this segment must also provide forms 1094 and 1095 for their organizations and employees. Technology, like Maxwell Health, has made reporting easier than ever, and many payroll providers include tools for calculating full-time eligible employee populations and affordability testing right within their systems. Now that the ACA has been in effect for several years, many employers have realized there are relatively painless ways to comply. Great brokerages provide tools to help their employers with respect to reporting and compliance. 

Small companies have had differing challenges, mainly surrounding controlling their rates, calculating premiums, and navigating the ACA benefits market. With the adoption of guaranteed issue pricing for companies with under 50 employees, many carriers exited the fully-insured small group market and some were purchased by larger carriers. Age banded rating has been a challenge for many small companies and guaranteed issue pricing has made many pay more than they should, and has helped others to pay less. Again, companies have to rely on expert benefits brokers to ensure they don't overpay for group premiums. A very important part of this puzzle is determining a group's underwriting risk profile. If a broker tells a company they are 'sick' and cannot obtain better rates without having that come directly from a carrier or third party underwriter, it may mean proper due diligence was not performed. This is a common broker retention strategy, but comes at the expense of the client. 

In summary, the ACA has impacted all employers that provide group benefits in some way or another. Ultimately, companies must work with benefits consultants that know how to help them to navigate the group market, remain compliant, and use best-in-class solutions to ensure programs are smoothly operated and cost-competitive.