May 16, 2014
It’s Time To Change – Because the Business of Health Insurance Has Changed
When it’s time to renew your health insurance, most businesses are finding that their new premium costs are an expensive shock. Double digit rate increases are common. Insurance carrier CEOs say it could get even worse going into 2015. Given everything that has happened with the federal Affordable Care Act and new state coverage mandates and how insurance carriers have responded – merely tinkering with plan designs will not make things much better.
It is time that businesses changed the way we organize, purchase, fund and deliver benefits and that is exactly what the CEMA private benefits marketplace does for its members – but only with local brokers who understand how the new world of benefits management is evolving.
We don’t start by discussing premiums, carriers or plans or rate hikes. The new world of defined contribution plans and electronic marketplaces is here today. And, don’t be confused by the federal and state run “exchanges” – ours is very different. Below illustrates an actual renewal process for a small business in Connecticut that has transitioned from the old defined benefits model to a defined contribution plan using a private marketplace just like ours. As a member of the CEMA, your company and your employees can participate in the same experience.
An Actual Renewal and Transition to Defined Contribution Plans – May, 2014 in Connecticut
A small business with 18 employees was on an Anthem Blue Cross “Gold plan” and faced a large rate increase for the coming year, too large for the company to afford. The company decided to end its defined benefits plan and transition to defined contribution to control its costs while providing great benefits options for its employees.
How? The first conversation with a professional benefits advisor, such as gbac (CEMA marketplace manager), is about what the company can afford to spend on benefits.
Once the decision is made to go with a private marketplace and defined contribution model, the company does not start by discussing plans, carriers or rates. gbac starts by working with the company to come up with a budget for benefits with which the company is comfortable. So, the company – out of the gate – exercises control and certainty over its costs.
Then and only then, the company decides what benefits, carriers and plans are to be offered to its employees. The company doesn’t pick one plan that fits all – the company can pick the full range of benefits, carriers and plans from which its employees will choose.
Next, the company decides how it will divide up its benefits budget among its employees. It can do that by those who are in executive or management or rank and file roles, or by age banding, or by whether they are an employee, employee with children, employee with a spouse, family and so on. So, your employees will be able to choose what level of benefits are appropriate for them, knowing how much the company will cover and how much it will cost the employee.
gbac then meets with the employees to explain their new ability to choose the benefits they want to buy based on what’s best for them and their family. Employees are informed of what amount the employer has on account for them in the health insurance and employee benefits marketplace – and how the CEMA’s private benefits marketplace works.
Next, each employee is walked through enrolling for the benefits they want in the marketplace, using the funds the employer has put on account for them. If they spend more than what has been put on account, the balance is paid by the employee through payroll deduction.
Finally, the company pays the carriers each month just as it does now. What is paid is based on what the company budgeted plus what has been deducted from the payroll of employees, much the same as it works now. The CEMA marketplace and gbac make it all easy to administer.
WHAT DID THIS ACCOMPLISH?
• the company avoided a large rate hike
• the company set its own benefits budget
• the company determined how to divide up its benefits budget among its employees
• the company decides what benefits, carrier and plan options to offer to its employees
• the employees were educated about their choices for their own benefits
• the employees used the marketplace to make their benefit program choices for themselves, becoming informed consumers of benefits for the first time.
• the employees are happier because they are in charge of making their own benefit choices, rather than having those choices made for them
• the employees get to purchase ancillary and voluntary benefits beyond health insurance, some of which they have never had a chance to see before, such as vision and dental coverage, and life and disability insurance.
• The company enjoys the ease of administration of its benefits package.
All this can be done with the guidance of a professional benefits advisor, such as gbac.
You can avoid the treadmill of endless rate hikes and no choices through the CEMA Private Benefits Marketplace and benefit from gbac’s professional advice. You CANNOT get this service from the government exchange because the government exchange doesn’t provide this service nor does it provide the breadth of carriers, plans or benefit choices found in the CEMA Marketplace.
1/7th of the US economy has been upended by the Affordable Care Act, by government’s regulations and executive orders and how carriers respond. We aren’t going to make things easier on members by small measures or tinkering with a few plan design changes.
Make sure your broker understands our new private marketplace model and how it can provide a much better solution for you and your employees – better yet, make sure you do!
No member of CEMA or any other association using our gbac APG private association health insurance and employee benefits marketplace should ever have to face a massive rate hike thinking there are no options. There are options, great options that work for members of trade associations and their employees – just like the small petroleum marketer featured in this article.