Premium Renewal Pit Stop

Drive Circles Around Rising Healthcare Costs by Gearing Up to Evaluate Your Renewal

Do you have all the tools you need to effectively evaluate your group’s premium renewal and appropriately advise about self-funding? As premium renewal season approaches, it’s important to equip yourself with the right resources to fully understand your groups’ premium renewals and advise your clients on the best plan structure for their needs.

Outpace Rising Healthcare Costs

By gathering the right information ahead of time, you will be better prepared to understand where your renewal is coming from, how to evaluate the numbers in front of you, and negotiate effectively.
Here are four key pieces of data to add to your toolbox (plus a bonus!):
1. Last year’s renewal. By reviewing the methodology and assumptions used to determine your group’s rate in the past, you can easily compare this year’s renewal to last year’s and identify areas that may have changed significantly.
2. Your group’s claims history (preferably more than one year’s worth). Carriers use claims history to arrive at their final premium calculation and tend to weight more recent years more heavily. If you can access this data, it will provide you with additional insight into how your group’s rate was determined and where to question the carrier’s calculations.
3. Enrollments by month. Understanding the demographics and enrollment of your group will help you compare your data to your carrier’s data and assumptions for more effective premium analysis.
4. Large claims for the experience periods. This will help you to understand if your carrier is overstating large claims for your group with a higher pooling level that places more claims in the experience period, which can result in a higher than usual premium increase.
5. Bonus: plan design history, demographic history, enrollment by coverage tier history, and/or network discount history. These pieces of data will help you to normalize the factors that may skew your group’s estimates and provide you with a more balanced claims projection.
Even if you don’t use these pieces of data to perform a robust analysis of your premium renewal, the fact that you asked for them will make your carrier more thoughtful in their calculations since they know they’re being observed. We call this The Sentinel Effect.
Want to know how to use all this data to perform a full analysis of your group’s renewal? Download our new e-book: Guide to Interpreting a Health Benefit Plan Renewal! We’ll deliver a copy straight to your inbox. Get it here!

Changing Lanes: Is It Time to Consider Self-Funding?

As premium renewals roll in, some employer groups might start considering self-funding as an alternative to rising rates. So, is it time for your groups to consider self-funding?

Here are the top signs that a group might be ready to switch from fully insured to self-funded:

1. Their premium renewals are increasing year after year even though their claims and enrollment have been steady. While a small premium increase is common to account for trend and inflation, large increases in a stable group should be scrutinized closely.
2. The group’s population is growing. A larger population provides a larger risk pool to absorb the volatility of self-funding, so it is easier to project claims and predict plan costs for a larger group and ensure that the plan is functioning effectively.
3. The group only has a small number of large claims. This indicates that the population is lower risk, which makes maximizing the return on a self-funded plan easier for the plan sponsor.
4. If you are unhappy with the management of the group’s claims. As self-funding grows in popularity, more resources are available to lower cost and optimize for each group’s characteristics, such as working with a PBM or tweaking the group’s plan design.
If you’d like to perform a full assessment of the fully insured to self-funded analysis, our tools significantly simplify the process so you can easily advise your groups. With our ClarosRisk tool, you can:
Get in touch with us to make the most of your clients’ self-funded plan.

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