PEOs Make inventive Adjustment to Benefits to keep Competitive

PEOs Make inventive Adjustment to Benefits to keep Competitive

Small and mid-size companies are not the only ones who have been hit with unusually high group health renewal rates this year. Many employee leasing companies and specialized employer organizations have seen their health insurance carriers announce rate increases that are 2 and 3 times what they have experienced in the past.

PEOs understand that most employers cannot provide to absorb these additional premium increases (already during good times). Small and mid-size companies are looking to reduce costs in this challenging economy, and are looking to their PEO partners for solutions. Some employee leasing companies simply passed the higher costs on to their client companies. This has proven to be a costly mistake, as business owners left for more affordable options from some of their competitors. Many specialized employers fought back to get concessions from their health plan providers, this helped to limit some of the increases. Some PEOs took more creative steps to reduce the effects of the rate hikes by eliminating their best plans and introducing new “value” plans. Now the platinum plan is gone, the old gold plan became platinum, silver became the gold plan and so on.

Many leading specialized employer organizations utilize employee assistance experts who developed inventive plan designs that helped to bring down premiums without having a meaningful negative affect on the base coverage. One large company for example, capped their lifetime plan maximum at $2 million dollars, down from $5 million. The likelihood that this will impact any insured is almost zero, however it does help to reduce overall plan cost.

Another step was to introduce deductibles to the drug card. Most healthy employees rarely see any meaningful assistance from their drug card. Employees who have high utilization will nevertheless have copay’s after the deductible is satisfied, and anyone filling a prescription will only have to pay the health plan’s discounted price for the medication. Tweaks like this help to reduce costs, but more importantly, do so equitably and without having to shift large out of pocket expenses on the backs of their employees.

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