Employers Fight Inflation with Cheaper Benefit Plans
How to Cut Costs with Level-Funded Policies
Now that COVID restrictions have eased and local employers are ramping up their businesses, they must grapple with a new problem – high inflation. As a result, these employers are searching for ways to offset the rising expense of running a business.
According to Jerry Calistri, President and CEO of the insurance brokerage firm Swift Kennedy & Associates, these business owners should consider switching from traditional employee benefit packages to level-funded plans and other self-insured policies in order to control costs.
Reduced Costs and Potential Refunds
“Level-funded plans can offer employers substantial savings in this inflationary environment because of the fact that they do not include marketing expenses, have lower administrative costs, and are exempt from premium taxes and most state regulations,” said Calistri.
These plans also allow business owners to pay a fixed or “level” monthly fee (based on expected claims) that is usually lower than traditional insurance premiums. In addition, employers may be awarded a partial cash refund if actual claims are lower than expected. (If claims are higher than predicted, the employer’s stop loss insurance will kick in.)
Transparency Leads to Cost-Efficiency
Unlike business owners with traditional insurance plans, those with level-funded policies receive claims activity reports with detailed information about employees’ health care usage patterns throughout the year.
This transparency of claims data allows employers to take advantage of another cost-saving feature of level-funded plans – the customization of benefits.
“Having access to claims data lets business owners customize their benefit offerings so that they are more cost effective,” said Calistri. “For example, if their employees seem to be over-using hospital emergency rooms, employers can tailor their plan designs so that workers have incentives to use urgent care centers and doctors’ offices for health problems that aren’t life threatening.”
Most level-funded plans offer a variety of services designed to engage employees more fully in their healthcare decisions, while maximizing employers’ cost savings,
For example, many plans provide wellness programs designed to motivate workers to pursue healthy lifestyle choices such as exercising, since it is widely recognized that a healthy lifestyle can reduce employees’ medical costs.
Many of these plans also include telemedicine, which lets employees have online medical appointments and is not only a big money saver for employers but is also highly convenient for workers. In addition, some offer prescription benefit management programs, which help employees select generic and mail order drugs rather than more expensive brand name products.
“If you are a business owner who wants to explore level-funded employee benefit plans and the other alternative funding options that are available in this area, consider contacting an insurance broker who is knowledgeable in this field,” said Calistri. “You may be greatly relieved to learn how much you can save in this inflationary environment!”
Swift Kennedy & Associates, an insurance brokerage firm specializing in group employee benefits and senior insurance plans, helps businesses find affordable medical, dental, vision, life, and disability plans, as well as alternative funding options. The agency works with all health insurance carriers in Pennsylvania and has branches at Virginia Beach, as well as in DuBois, State College, Williamsport, Scranton, and Johnstown, Pennsylvania.
Jerry Calistri, who is President and CEO of Swift Kennedy & Associates, has worked in the employee benefits industry since 1991, including at the Pennsylvania Employees Benefit Trust Fund in Harrisburg. As a Certified Healthcare Reform Specialist, he has conducted educational and consulting seminars for employers, local chambers, and small business development councils about healthcare reform. He is also a Senatorial Member and PAC Board Member of Health Agents for America, as well as a member of the International Foundation of Employee Benefit Plans. In addition, he is an active member and past president of the Mid Penn chapter of the National Association of Health Underwriters. He can be reached at email@example.com.