Top Health Insurance Guide

Part of the reason that I initially got my indemnity license, was that as a business consultant focused on change management, nearly every business title-holder, CFO and HR boss that I spoke to questioned me what I could do about the rising cost of their healthcare benefits. Up in anticipation of recently, with regard to their major medical plot costs rising at dual-digit tariff every year, there was small I could recommend aside from biting the bullet and accepting that it would be a painful process of micro re-examination of plot costs nearly every year. Many choice makers are being forced to shift costs to their employees or do away with certain benefits altogether. Fortunately, now there is finally a sensible way to reduce costs (and taxes, by the way), give employees more choice, more security and believe it or not, keep them from storming the castle with rakes and torches when you question them to contribute more out of their own pockets. These plans are aptly called “Consumer Driven Health Plans” (or CDHPs) because the policyholder makes as many choices about their health benefit plans as their employer.

Two key gears of CDHPs have been receiving a lot of press. The initially is the Health Savings Account (HSA), which must be used in conjunction with the second, a High Deductible Health Plot (HDHP). Without going into fantastic detail about the restrictions, the whole thought is that by enrolling in a major medical health indemnity plot with a significantly higher deductible ($1000 or more), the companionship (and/or the employee) can dramatically reduce the premium cost. In addition, by replacing Flexible Costs Accounts (FSAs require the participants to use the tax free money contributed during the plot year or lose it) with HSAs (that allow the participants to accumulate money in their account tax free BUT the money rolls over from year to year) eventually, the deductible is covered with tax-free dollars.

The only downside to this plot is that FSAs make the elected amount available on day one of the plot, whereas HSAs allow only the amount that has been funded to date to be made available. In other words, for most folks, the initially year of such a plot puts them at risk for substantial out of pocket expense related to the deductible.

The way to avoid this risk is to implement a third key component of the plot, Supplemental Benefits. Most often via a new or existing Cafeteria (Section 125) plot.

For several reasons, supplemental benefits should be the initially step in any HDHP/HSA plot. Initially is that they introduce employees to employee funded, 100% voluntary plans so employees come to feel comfortable with contributing to their own financial security. Second is that supplemental plans cover deductibles and co-pays, so employees grasp that by participating, they reduce their own out of pocket expense should the unthinkable happen. Thirdly, they learn the value of pre-tax dollars. And last, more choice lends itself to better education in just what those choices are. In other words, employees take more interest in learning how their overall plot fits together and what the best choices are for their family.

When Supplemental plans are introduced initially, employees feel empowered by the fact that the companionship is giving them options to better protect their family without changing anything else. Then when the HDHP/HSA changeover is eventually made, far fewer employees will feel like they’re getting the small end of the stick.

So what makes up a excellent Supplemental plot?

While many of the plans are similar in benefits and structure, the providers vary widely in how they work and what they really provide in terms of customer service. Your employees trust you to select high feature benefit providers that give them financial stability and control when they need it most. As more and more players enter the game, every indemnity provider will be touting their respective accolades. Just be aware that many small, unproven operations hide beneath the veil of a well-known brand. In some cases, indemnity conglomerates are simply an affiliation of unrelated subsidiaries that were bought for a specific strategic purpose; in this case, to enter the voluntary benefits market. Like the Wizard of Oz, you may find that a parent companionship’s financial and marketing statistics give a misleading view of the size and capabilities of the business unit that really does the product point, underwriting, and servicing.

Nobody likes surprises. Especially, related to financial security. And the last thing anyone wants to hear from an employee who has claims issues and thought they signed up for a policy with BIG Indemnity Companionship (whose polished marketing reps touted gazillions in financial backing and being of experience), is that they’ve now found out that the policy they were counting on to protect their family was really underwritten by the Inhabitant United Smoke and Mirrors Indemnity Companionship of Hoboken, NJ., which did strictly Property and Casualty indemnity in anticipation of last year. So pay attention to the man behind the curtain.

If you question the right questions of potential providers, you’ll be doing your companionship and your employees a huge favor by picking the best provider for their needs.

Here are some suggestions:

Who is really underwriting the policy and how long have they been doing it?

Experience has its strength, and in the guaranteed renewable (supplemental) market, size does matter. What is the companionship’s history and track record? You want a companionship that has the depth to handle any adverse selection, and a track record of satisfied clients crosswise industries.

What is the financial permanent of the companionship?

Regardless of whether you use A.M Best, Temperamental’s, Fitch, Standard and Poors or some other rating system, make sure you choose one of the highest rated companies. There are several. A is better than B, + is better than -, and so on.

How is the companionship recognized?

Accolades and industry market share are some indicators, but what you’re really looking for is long-term satisfaction by clients. Long-term relationships with companies like your own are excellent indicators. More importantly, what is the actual in commission unit that provides the underwriting classified as? A life indemnity companionship? A property and casualty companionship, or a liability companionship?

And what are its individual ratings?

Are voluntary benefits the indemnity provider’s top priority?

Are supplemental/voluntary plans the companionship’s only focus or are they a sidelight predestined to be a means to open a door to other relationships? What percent does the indemnity being offered speak for of the parent companionship’s overall premium base? Who you choose can have a lot to do with whether you want to place all your eggs in one basket…or not.

Is representation inhabitant?

Do they have a physical presence in all 50 states or just an 800# that goes to a central office? Do they have dyed-in-the-wool agents in your geographic backdrop or is it a loosely tied, affiliation of middlemen spotted crosswise the map? For companies with one or two local twigs, this is not an issue. But, even for companies with many locations in a single state, how consistent your message is conveyed and how well your employees are serviced depends on how well the companionship’s representatives are qualified crosswise the geography. What is the depth and feature of backup?

How often do the tariff go up? And what are the circumstances that yield rate hikes?

Some companies guarantee tariff for policyholders for a period of time (usually two or three being). Do some due meticulousness as to how often and how high those tariff increase over time. Require a written history. Past practices are a excellent predictor of future trends. The industry leader has never raised its tariff for existing policyholders, but is still one of the top selling indemnity stocks. It doesn’t make sense to get a fantastic low rate, if in only a few being it becomes a high rate.

How complicated is the underwriting?

How far back does the underwriting go for vital illness plans? Are any disclosure documents required outside of the application? How many questions are questioned during a predictable enrollment and what do they require for information on pre-existing conditions? What you’re looking for is as small underwriting as possible. Guaranteed Issue is uncommon unless the group is very large, and in many cases not available at all from even the best companies. Know what the parameters are for “blow-out” questions. Make sure they seem evenhanded.

How austere is the companionship’s definition of disability?

In some indemnity policies’ definition of disability, the insured must be entirely unable to perform each and every duty of his/her job, as well as other specific requirements. Other companies are more liberal in their definition of “total disability” before benefits are paid, often requiring that the insured only be unable to perform “material and substantial” duties before they are deemed disabled. This is one of those areas that vary widely so know what defines “disabled” by seeing documented examples. Less stringent is better.

What is the companionship’s loss ratio?

Loss ratio is defined by incurred claims over the life of the average policy divided by earned premium. Meaning what is the average payout versus what the policyholder pays in? Higher is better.

How quickly does the companionship pay claims?

Unfortunately the landscape varies widely in this key factor. Quicker is better. Less hassle is better. Do your homework on this one. Some companies have been nailed in recent being for having internal policies relating to failure to pay of legitimate claims. It’s been uncovered as common practice in other companies to deny legitimate claims pending certain documents that seem to become less and less relevant, stringing you along for months hoping that you’ll give up. Look very closely at procedures and question for statistics on both common and uncommon claims.

Do benefits require coordination with other coverage before payment is issued?

Some companies offer plans that sound fantastic, but if coverages overlap, all the benefits are not paid. Other providers pay over and above any other indemnity the policy holder has, regardless of type or amount or to whom the benefit is payable.

How are benefits paid?

Are they paid directly to the policyholder? To the doctor or hospital? Or some combination of both? Since more choice is better than less choice, the preferable payment is directly to the policyholder who then determines everywhere the money goes.

Does the companionship encourage preventive care as part of its policies?

Many companies encourage preventative care as part of their base policies and incent policyholders to seek common precautionary screenings in an try to reduce claims. It makes excellent sense all around since ahead of schedule-detected conditions usually result in more effective treatment and less time off work. Look for companies that make such benefits a real part of the plot, not riders or options.

Are the policies offered portable?

Portability means that the policy is owned by the policyholder and not the companionship. So if the policyholder leaves the companionship for any reason, the policyholder retains coverage at the same levels. Right portability means at the same rate as well. Some companies confuse convertibility with portability, making policies truly portable only under certain circumstances. Convertibility means that the policy converts from one form to another, usually a change in benefits offered or tariff.

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