Year One - Reduced their cost by 27% and Increased Their Benefits!
When we first approached this new client they were with one of the top 5 largest benefits firms in the country. In fact, they had been with them for over 10 years. During our first meeting, it was explained to us that they meet with brokers every year and none have been able to show them anything of value. We were giving very clear instructions... "Come back with anything that reduces our employee's benefits and you will be thrown out!"
First thing we noticed was there were several older people of Medicare age on the plan. What we discovered after going through our investigative stage was that these employees were owners who were active in the company because of their need for medical benefits. These employees were ready to retire but couldn't because of this need. When we were done with our analysis, we came back with an option that allowed them to finally retire while simultaneously increasing their benefits. This was a huge win for them and the regular staff.
By installing a retiree group medicare plan, this removed them from the active census. This move lowered the average age of the group by several years which produced a census that would provide rates over 20% lower than their pre-renewal rates. With a younger, more competitive census in hand we scoured the market for the most competitive plans and rates. What we found was nothing short of amazing. Richer benefits at a lower cost! Because of this, employee contributions went down essentially providing them with a raise. In a market where raises were difficult to hand out, this was an easy one to achieve.
Because this more competitive census has remained for over 3 years now, we estimate that this employer has experienced close to $200,000 in savings over this time. When an employer can achieve savings like this, its no wonder no broker has even been allowed to step foot in their door since.
Year Two - Faced with a 20% Increase, we get Creative!!!
With the new census churning out lower renewal rates than they would have, this group was still faced with a increase in the neighborhood of 20+%. Again, determined to not reduce the employee's benefits or increase their cost, we had to get creative. Our first step was to scour the market for competitive plans. Unfortunately, the carrier we switched them to the year prior was still the most competitive. This meant trying to find solutions with the current carrier.
Because of our vast experience in underwriting and in the large group market, we know that large group market tactics can often work in the small group market as well. This experience would lead us to an option that would not only reduce their renewal cost below their current pre-renweal rates, it would again provide the employees with richer benefits at a lower cost!
For the second straight year, the employees would essentially get a raise in pay and a raise in benefits!
Our end result was to install a self-funding arrangement that would allow the employer to pay for expenses that the health plan would not. The plan, which previously had a 100% hospital and surgical benefits, would now include a deductible and coinsurance option. This deductible and coinsurance would be paid for out of a fund which the employer would set up specifically for these expenses.
Because the rates on this type of plan are less expensive than the previous 100% option, the huge reduction in premium would more than pay for the additional cost that the employer would have to incur. Even if every single employee would utilize this fund, basically spend time in the hospital, the savings would still be greater than the additional cost. Essentially, giving the employees 100% coverage at a lower cost. This option worked out very well and the employer and their employees benefited tremendously for it.
One Client - 2 Years and Lower Rates Both Years!