Planning for 2020 Health Insurance Premium Increase and Strategies to Off-set Costs
New York State’s Department of Financial Services issued a press release
earlier in September that we want to highlight here. Despite the federal agenda to roll-back consumer protections under the Affordable Care Act (ACA), the state’s Department of Financial Services (DFS) continues to progress in protecting consumers by reducing health insurance carriers’ 2020 requested rate increases.
More than one million New Yorkers are enrolled in small group plans, which cover employers with 1 to 100 employees. Health insurance carriers requested an average rate increase of 12.2% in the small group market. DFS cut the weighted average requested rate increases by 35%, from 12.2% to 7.9% for 2020. The federal ACA Health Insurance Tax (HIT tax), which was re-imposed for 2020, accounts for approximately 3% of these rates. Without this tax, the increase would have been 4.7%.
What Are You Paying For?
Part of the rate increase accounts for new state mandates to ensure more expansive contraception coverage as well as medically necessary abortion coverage with no cost-sharing. Coverage for in-vitro fertilization for large employer groups (over 100 employees) and fertility preservation services for those with serious health conditions will be built into the 2020 covered services. New York passed a state law codifying the protections of the federal Mental Health Parity and Addiction Equity Act (MHPAEA), strengthening coverage for addiction treatment including limiting copayments to one per day, even if a health care consumer has multiple addiction treatment services that day. Last, New York took action to protect access to coverage for the LGBTQ+ community, including enactment of a state anti-discrimination law in the face of a federal call to repeal those protections.
The main driver of premium rates is underlying medical costs. For the 2020, as in prior years, drug costs account for the largest share of medical expenses, followed by inpatient hospital costs, and outpatient hospital costs.
What Can You Do to Contain Costs?
Providing high-quality health insurance benefits is fundamental to attract and retain top talent. But with healthcare costs continuously on the rise, you’ll need to contain costs while still offering a quality benefits package. If your organization is self-insured, experience rated, or community rated there are several strategies you can deploy to reduce the financial burden of rising health insurance premiums year after year.
- Review your current health insurance plan design. Enrollment in high-deductible health plans (HDHPs), including some paired with health savings accounts (HSA), rose quickly during 2007-2017 among people insured through their employers, while enrollment in traditional health plans (co-pay plans) dropped sharply, according to a report released by the National Center for Health Statistics. Introducing a high-deductible health plan, or increasing the deductible amount on your high-deductible plan is one way to lower the monthly premium. The majority of employees will be eligible for a health savings account (HSA) that allows them to set aside pre-tax dollars to pay for health services (such as office visits, hospital stays, prescription Rx).
- Consider a workplace wellness program. A wellness program, executed strategically, can help your organization contain or reduce costs through preventive services, earlier access to services, and wellness education. A great way to start is to see what is already available to your employees through the benefits you offer. For example, Employee Assistance Programs (EAPs) typically offer more than just free and confidential counseling services and the wellness services in an EAP program are statistically underutilized by employees because they aren’t aware of them. Your employer health plan also has wellness programs built into the premium. It may take a little leg work but reach out and partner with your benefit carriers or broker to help your organization promote these wellness offerings. Supplement this with employee engagement activities such as healthy snacks at meetings, a group walk during lunch, and a fun challenge to strive for more fruits and vegetables in your daily diet – and you’ve just started a wellness program.
- Encourage employees to take advantage of disease management and health coaching programs. Health insurance carriers want subscribers to take an active role in managing their health and wellness because it reduces the likelihood of high cost medical and prescription Rx claims. Disease management and health coaching services may be built into your health insurance premiums. Maximize your benefit offerings by promoting these services in your organization. You can start by hosting a healthy lunch and learn and inviting your health insurance representative to educate your employees on all the services available to them.
Want to talk more about planning for health insurance premium increases? Contact Barbara Marianetti at email@example.com