by Mike Bechtol, Redirect Health

The U.S. healthcare system is more volatile than ever before, raising concerns among subcontractors and other employers weighing their options for employee healthcare benefits in 2018. Business owners everywhere are looking for ways to save money on their company’s healthcare.

But regardless of the outcome of the nation’s healthcare shake-up, many employers will be surprised to learn that it won’t reduce the cost of healthcare for businesses. As in years past, companies of all sizes can expect health insurance rates to continue to rise. In fact, 2018 marks the fifth consecutive year that health insurance costs are expected to increase by at least 5 percent.

These annual rate increases leave many business owners feeling trapped, but there is another option for business owners who are looking for easy and affordable healthcare for their business—and it may just prove to be the silver bullet for companies that want to save money and fuel the growth of their business.

Subcontractors that want to break out of the cycle of paying for expensive health insurance that doesn’t meet the needs of their business can start by asking their brokers these five questions:

Why do my premiums go up every year?

Most companies offer employees a traditional medical insurance plan. Business owners believe their insurance rates will stay the same or even decline if their company’s claims are low, but this is simply not true.

No matter how low their utilization, the insurance carrier will set rates using a risk pool system that “pools” their business with other companies of the same size and in the same geographic area. One business’ utilization hardly matters—it’s a drop in the bucket of the risk pool. Their rates are almost guaranteed to increase, every single year.

Are there other options to a fully funded medical plan?

 There are options for subcontractors and other business owners who want an easier, more affordable healthcare plan, but many brokers are unfamiliar with these options. In fact, most brokers only have a traditional medical plan in their portfolio, and this almost always means annual rate increases. Unfortunately—for brokers and their clients—few companies are happy when their insurance rate goes up, even if their broker fought hard to minimize the increase. Brokers usually have their clients’ best interests in mind, but it’s the business owner who understands the needs of his or her employees.

There are other options, but business owners may need to urge their brokers to search for a healthcare strategy that makes it easy and affordable to provide healthcare for their employees.

Could a self-funded health plan work for my business?

Self-funded health plans are gaining in popularity. While the vast majority of large companies have saved a lot of money being self-insured for decades, the trend is now taking hold among small- and mid-sized businesses—especially because self-funded plans yield such high cost savings.

Employers who self-fund design a plan that fits the specific needs for the business. Benefits may include medical, dental, vision, prescription medications and workers’ compensation. For employees, a self-funded health plan offers better benefits than many of the traditional plans they are used to.

Unlike fully funded plans, self-funding allows companies to customize their benefits to meet the needs of their workforce. For subcontractors, this may mean providing robust benefits for injury and chiropractic care. Employers can determine how the plan will be funded and whether employees will pay a percentage of claims.

Of special note to construction companies, a well-designed self-insurance plan can dramatically reduce workers’ comp costs, improve eMod scores, and provide an affordable way for lower-wage or support-level employees to access healthcare.

How can self-funding helps contain costs?

Many businesses contain costs and save money in a few different ways:

Stop-loss insurance: With this coverage, the business pays employees’ health claims up to a certain dollar amount. Stop-loss kicks in after that threshold is reached, typically in the case of catastrophic diagnoses or accidents that require ongoing, specialist treatment. A stop-loss policy allows companies to modulate their risk and protects them from unexpected financial loss.

 Use of data: Businesses seeking to control costs must own their healthcare data—but this isn’t an option with traditional health insurance. With self-insurance, companies have access to every claim, from prescription medications and primary care visits to ER usage and specialist care. This allows businesses to benchmark their utilization against other companies’ or flag and address any worrisome trends. The bottom line is that by owning the data, they can react to it as needed, allowing them to better manage their healthcare program while keeping costs in check.

 How do I optimize my self-funded plan?

 Businesses that want to maximize the benefits of self-funding must understand the factors that impact costs. For example, a hospital charges about $4,000 for an MRI, but an identical MRI costs just $400 at an offsite imaging center. The same is true of X-rays, blood and urine tests, and other common procedures. In addition, a simple antibiotic may cost $40 at a corner store pharmacy, but just $10 at a supermarket pharmacy. Simply directing employees to the right place of service can yield thousands of dollars in savings—with no compromise in quality.

Likewise, managing care for employees with complex health needs also improves the bottom line. For example, closely monitoring a diabetic to ensure he or she is stocked up on insulin and other supplies can help avoid a costly episode—a tremendous benefit to both the employee and the business.

All of that said, few businesses have the time or expertise to manage employees’ health. While TPAs typically handle the administrative aspects of a self-funded plan, employers should also consider working with a partner organization to aid employees in navigating the healthcare system. This partner helps with injuries and illnesses from beginning to end, ensuring employees receive the care they need, at the most appropriate site of service and at a fair price.

Self-funding offers a smart, innovative healthcare solution for construction and building companies—and businesses across all industries. Simply asking your broker these five questions can transform your company’s healthcare strategy, drastically cut costs, and provide your employees with a simple, convenient and satisfying experience—a 180-degree difference from most people’s experience with healthcare.

Mike Bechtol is director of Care Logistics for Redirect Health. For more information about self-funded health plans, contact Redirect Health at (888) 995-4945 or visit redirecthealth.com/asa.