Concerns with Fully Insured Plans

Traditionally, most companies chose a benefit plan provided through an insurance company. The employer pays a non-refundable premium to the insurance company to assume the risk and cover the benefits. That may have been fine when benefit plans were first introduced, but two significant changes in the benefits industry over the past number of years are forcing employers to think about their plans differently.

INCREASING HEALTH CARE COSTS -

While the general inflation rate has been between 2 and 3% over the last number of years, the cost of benefit plans has gone up significantly faster. Health care inflation trend factors used by insurance companies have resulted in increases of between 10% and 18% annually. Insured health program premiums are set to reflect these factors, raising rates to cover off what the insurance company estimates it will cost them to insure.

FEWER OPTIONS –

Consolidation and demutualization of the insurance industry means fewer competitors and options when it comes to plan selection. Today the top three group insurance providers control over 60% of the market. If employers don't like the annual renewal increases, there are fewer options for them to consider.

A fully insured plan may not be the best solution for your employee benefit program.