We’ve gotten through the stress of the holidays, but like any business owner or manager, right about now you’re probably feeling pulled in a thousand different directions with planning and forecasting for the new year. To keep time on your side, it’s tempting to make some decisions by default, like simply renewing your group health insurance plan instead of weighing the possibilities.
If you already renewed your 2016 health plan, there’s still time for you to make a change. It’s a well-kept secret, but group plans are actually month-to-month contracts you can end at any time.
With that in mind, let’s take a breath, pause from the New Year chaos, and compare the types of health insurance plans you can choose from in 2016:
Employer-sponsored coverage with a defined benefit
This is the “traditional” group health plan option:
- You offer employees a choice between, generally, one to three health plans.
- You cover a percentage of the plan premiums.
- Insurance companies underwrite coverage based on many factors within the group.
- Younger people typically pay more for this coverage versus plans in the individual market.
Employer-sponsored coverage with a defined contribution
In this group plan option:
- You give employees a set amount of money to use to buy their choice of plan instead of paying a percentage of plan premiums.
- The money is often distributed through a Health Reimbursement Arrangement (HRA) so the employee can decide how to spend it.
- Employees typically use this money in a private exchange to get more options and benefits (like dental and vision) than what’s offered in a traditional group plan.
With a self-funded plan:
- You create your plan based on your group’s specific needs.
- You include the coverage your employees want and need, and eliminate paying for features they don’t use.
- You pay filed claims with plan assets.
- You can purchase stop-loss coverage to limit risk and protect yourself from above-average claims. Stop-loss coverage reimburses claims beyond a pre-determined limit.
There are two important risks to consider with self-funded plans:
- Claims could be higher than expected. While your stop-loss coverage would pay excess claims, the cost of coverage would likely increase.
- There is a substantial amount of administrative time and effort required to properly manage the plan.
Transition employees to the individual market
Using the individual market for employee health insurance is different than group insurance. Using a service like Gravie, you can give employees additional compensation that can be used toward insurance costs. Your employees can then purchase their own coverage. This option provides significant advantages to you and your employees. Here’s how:
- You determine the amount of money you give each employee because there are no minimum contribution or participation requirements.
- You save money. With Gravie, our clients have saved an average of 36% on health insurance costs. (Learn about cost savings: 3 Big Ways Individual Health Insurance Beats Group Plans)
- You free yourself of administrative hassle. Employees work directly with Gravie—not you—on everything related to health insurance, including the sometimes-personal questions employees come to you for throughout the year. Plus, Gravie can arrange to get the additional compensation to the insurance company each month, so your employees only pay the balance on their plan.
- They are empowered to choose a plan based on their own healthcare and budget needs, with the help of Gravie advisors.
- They have year-round access to unbiased Gravie expertise through our intuitive online platform or our advisors. We’ll help employees sort through plan options, answer questions, and help determine if they are eligible for government tax credits.
- They often save money using the individual market.
Re-evaluating your health insurance plan is among the most important decisions you’ll make heading into 2016. You could reduce costs and satisfy employees, making it one happy New Year indeed.
Want to find out more about Gravie and how you and your employees can get a better health benefit? Download your free copy of our eBook, Gravie 101 for Employers.