Group Medical Insurance Alvin Tx
One of the biggest headaches that any business has is employee benefits. The Affordable Care Act, the 10% annual premium increases, and the raising of deductibles, co-pays, and coinsurance are unbelievable. To say it mildly: “American health insurance is in a chaotic state.”
To make the best decisions regarding group health insurance it helps to understand the structure of health insurance and a principle of insurance.
When you acquire group medical insurance Alvin Tx do you believe that you are getting insurance from one insurance company? Actually there is a chance that three insurance carriers are involved.
Health insurance is generally tiered into three levels. Each level refers to an amount of the claim responsibility. Therefore the primary level begins with the first dollar of a claim and extends to a particular amount. For many years the amount was $10,000, but now many times this level will go to the first $25,000 in claims.
The second or intermediate level would be the next $100,000 to $250,000 (whatever the contract states) in claim responsibility. The final level would be any claim amount over the intermediate level. The final level is referred to as reinsurance.
Since there are three levels and the levels are contractually defined, it is totally conceivable that your group plan has three insurance companies involved.
Since the claim must go through the primary and intermediate level to get to the final level, the final level will have over a $100,000 deductible. The number of claims reaching this point is generally few. The final level is still very reasonably priced.
Likewise, the claim must exceed the primary level to get to the intermediate level. As a result, the intermediate level will have that $10,000 to $25,000 deductible. The intermediate level is actually fairly priced.
However the primary level, the first $10,000 to $25,000 is where all of the claims originate and the vast majority of claims do not exceed this level. It is a level of frequent and lower cost claims. Co-pay plans add to an already extremely costly administrative expense. This level is very expensive and arguable that it is unaffordable for many consumers. If you are a small to mid size group, you should focus on a strategy for the primary level.
The insurance principle that is critical is insurance is a tremendous tool for the transfer of risk of low frequency and high catastrophic losses. This principle is why the final or reinsurance level is very reasonably priced. In the final level there is low frequency and the losses can be huge. This level is a perfect fit for insurance.
The primary level is high frequency with a low claim cost. Think about your doctor office visits and prescription co-pays. Insurance is not a good transfer tool for these areas. The violation of this insurance principle is one of the main reasons why the co-pay style plans have increased in premiums so much over the past twenty years. When co-pays became popular thirty years ago, we predicted today’s situation. Today’s situation was not avoidable, it was inevitable.
If you are trying to salvage your existing co-pay style employee benefit plan, our recommendation is to investigate the innovative products that adhere to proven insurance principles that give you some control and can lower the costs.
Your options are:
You can continue raising deductibles, co-pays and coinsurance to offset the premium increases
Replace the plan with something else.
Discontinue your employee benefits and be faced with possible penalties.
We’ll give you an example of why we like the innovative approach. We were contacted by a church regarding their employee benefits. The church was a member of an insurance trust. The trust was going out-of-business. The church contacted us for our assistance. They wanted a plan that was similar to their old co-pay style plan. We contacted the major carriers and got the most competitive co-pay plans available. We also got quotes for health savings account plans. Both style plans were presented. A retired insurance agent was one of the elders. Largely because of his support and the HSA plan had a $60,000 lower premium, the church chose the health savings account. Two years later, the church’s renewal had a 4.5% reduction in premium. Superior coverage and a lower premium is a combination that is hard to beat.
If you need information about the Affordable Care Act which has been also called Obamacare along with many other names, we plan on including a video in the future on this topic. If you need a plan to avoid the $2000 or $3000 per employee Obamacare penalties, there are Minimum Essential Coverage and Minimum Value Plans available. These plans should not be considered major medical plans. They are not free, but they are far more affordable than the penalties. Upon your request we will be happy to provide you with information regarding these types of plans.
If you are interested in our services, contact us at your convenience. Please, do not wait until the last minute and allow us to present you options.