Retiree Health Insurance Interview Series, Part 3: The Long-Term Transition to HRAs for School Districts and Early RetireesFebruary 18, 2014
Report: Health status, not age, most crucial aspect of ACAFebruary 20, 2014
Health Insurance costs continually rise – it’s like a runaway train with no end in sight. Last year’s average increase was around 4%. School districts and other local governmental employers need to begin looking at cost containment in a new way. It’s a shift from financially-driven decisions to strategically-driven decisions. It is no longer feasible to only look out over the next year taking one contract/renewal at a time. Now is the perfect time to create a 3-5 year strategy to position yourself correctly for the future. Your insurance consultant can help you.
This new strategy should be developed and incorporated gradually. Building your plan brick by brick gives everyone time to get used to a new way of thinking about healthcare and a new perspective on lowering costs. This will also give bargaining units time to negotiate and agree.
When formulating your benefits strategy, consider:
- What are your cost drivers? Have you reviewed your plan utilization reports lately? What employee behaviors are driving up your cost? Once you know how your plan is running, you can work to mitigate them through plan design and employee education.
- Organizational goals What are the long-term goals, short-term objectives and main priorities of your benefit plan?
- Employee communication plan Do you have a communication campaign planned? What behavioral changes have you seen in your employees due to your educational strategy? Is the communication helping to build consensus around the goals, objectives and priorities?
In addition, here are some cost mitigation plan design changes to consider.
- Dual Choice of products for medical coverage (Dual choice gives your employee’s a choice and future options regarding your EMPLOYER contributions)
- Spousal coverage options i.e. Surcharges or carve outs
- High/Low medical plan choice (base plan/buy up plan)
- HRA for retirees
- HRA option with “regular” medical plan
- HSA option with HDHP
- Self-funding your medical and dental plan(s)
- Employer/Employee premium contribution options
- Wellness initiatives that offer plan premium contribution options
- Preparing your benefit offerings with consideration to the 2018 Cadillac Tax
- Freezing plan enrollment in “High” plans that would be affected by the Cadillac Tax
The main idea is to introduce small changes over time. The only way to reduce costs is to reduce usage or define the benefit. Don’t forget to always stay flexible and creative to control, manage and mitigate yours and your employees’ costs with your options. This is a great way to begin your 3-5 year strategy to ensure that you don’t break the bank. The best time to start is now!