Rising group health insurance rates are one of the most significant expenses facing businesses and groups of all sizes. Premiums can increase year over year by 10% or more as insurance carriers struggle with rising medical costs and new benefit requirements.
Companies and groups who wish to offer low deductible, high benefit plans are experiencing rate increases that are in many cases forcing them to switch providers, increase employee contributions, and/or enroll in less comprehensive coverage.
One simply way for employers to reduce their monthly outlays for group health insurance is to implement a secondary payer plan. These plans can be combined with high(er) deductible health insurance coverage and then used to cover the larger deductible and coinsurance amounts.
In a nutshell, secondary payer insurance is coverage for out-of-pocket deductible and coinsurance costs. A company with a low deductible, benefit-rich plan can move their employees to coverage with a higher deductible in order to lower the monthly premium with their current (or new) carrier. A secondary payer plan can then be combined with their new coverage in order to offset the potential for increased out of pocket expenses.
In most cases, the out of pocket exposure to the insured will be nearly the same (if not less) but the overall premiums for the two combined coverages will be much less for the employer and/or employees. Secondary payer plans take the burden off the original carrier and shift it to the new insurance company. The new provider is only responsible for covering the higher out-of-pocket amounts.
The exposure is limited and predictable for the secondary insurance carrier and that helps them extend lower premiums to the group. Employees will be comfortable knowing their out-of-pocket expenses are not greater than they were before the change was made.
A common practice for groups wanting to lower their monthly premiums is to switch to a high deductible HSA or HRA qualified plan. In order to account for the higher out of pocket exposure, the employer might agree to partially or totally fund the HSA or HRA.
Over a few years, this can be a significant outlay for the employer, especially with a health reimbursement account as these contributions are irretrievable when they are not used. And employees with money left in a HRA toward the end of the year will oftentimes find ways to spend these funds so as not to lose them.
Unfortunately, a secondary insurance plan cannot be implemented with most qualified health HSA, HRA, or FSA plans. However, employer groups who are not satisfied with their tax qualified plans could consider moving back to a high deductible plan (with a secondary payer) and then provide the usual benefits employees prefer – like a small copay for doctor’s office visits and immediate coverage for prescription drugs.
Filing claims is usually no more difficult than with any other traditional carrier. The insured will carry their secondary insurance card and give it to the medical provider when benefits are received. In most cases, the medical provider will then bill the secondary carrier as they would any other.
In other cases, the insured can file the claim if they wish. The will only need an explanation of benefits (EOB) and the itemized bill from the medical provider. Both can then be sent to the secondary payer administrator for reimbursement.
There are no network restrictions with these plans. Employees can continue to use their regular doctors and hospitals as before. In fact, the administrator will contact often used medical facilities beforehand in order to insure a smooth transition for the employer and employees.
There are no underwriting requirements needed to enroll in most secondary payer plans. If some of the employees have significant preexisting health conditions, this will not increase the rates for any of the others. Rates are based on demographics, gender and age, but not previous health issues. In many cases, renewal premiums have been lower on a percentage basis when compared to major medical coverage.
Hyers and Associates is full service, independent insurance agency representing several group health insurance providers. We can help your business reduce its monthly premiums by shopping for coverage with several carriers, changing plans, and/or implementing a single payer plan.
Contact us today to request more information.
Category: Group Health Insurance