Take this scenario: you’re a business owner, and the annual renewal for the health insurance you offer to your employees is approaching. You receive a letter in the mail stating that your health insurance prices are increasing by 30, 40, or even 50%.
The situation described above has become a common occurrence in 2014, and business owners throughout California have been looking for ways to solve this problem. I’m here to explain to you how the most savvy business owners have been able to continue to offer health coverage to themselves, their families, and their employees without breaking the bank.
I will explain exactly why below, but for the sake of simplicity, there are three easy words that are the secret to solving the booming increases in health insurance costs:
Use an Agent.
It may seem simple, but so many business owners do not take advantage of this drastically helpful service. In some realms of industry, agents and brokers come with a negative connotation, but in the California health insurance world agents and brokers are nothing but beneficial to their clients. Let me explain why. First of all, AN AGENT DOESN’T COST ANYTHING. Some people have a hard time wrapping their head around this; of course, agents DO get paid for their work, but they are NOT paid by their clients. They are paid directly by the insurance company. And since insurance premiums are fixed by law in California, the price of going direct to the carrier is the same as going to an agent. This all boils down to the fact the businesses pay nothing extra to use the services of an agent.
Okay, so we’ve established that agents’ services come at no cost to their client, but what exactly does an agent do to benefit their clients? Well, most independent agents are appointed by multiple health insurance carriers, and the best independent agents are appointed by all the major health insurance carriers in California. This allows the agent to show potential clients plans and pricing from all the carriers, without the business owner (or human resources person assigned to the task) having to shop around to each carrier directly – costing valuable time and resources. With an agent, you get all the plans in one place and typically at a much quicker turn around time than going direct to the carriers.
When it comes time for renewal and the health insurance prices have skyrocketed, an independent agent is able to show you all the alternatives available in California. A good agent is unbiased towards whatever plan you choose. It doesn’t matter if you go with Anthem, Blue Shield, or Health Net, because they all pay essentially the same commission. So all that really matters is that the client choose the plan that suits them best. Typically, just by shopping around the other available plan pricings with an agent, a business is able to find an alternative to the drastic price increase for the 2014 renewal that is close to the price of the pre-2014 plan and sometimes it’s even lower!
Also, agents that are certified with Covered California are able to help small businesses (less than 25 employees) save on health care costs by up to 50% of the employer paid premium in the form of tax credits. As an alternative to the Covered California group market, some employers have found that using the Covered California individual market has allowed their employees to qualify for subsidies that drastically reduce overall healthcare costs.
There are plenty of other alternatives as well such as “wrapping” a bronze plan with an HSA so that it is priced closer to a bronze or silver level plan but has the benefits of a platinum plan. I won’t go into detail on this or any of the other alternatives because there are literally just too many to describe without writing novel.
So instead of explaining everything that an agent can do to help cut costs, I suggest that you call one up and see for yourself. In fact, call multiple of them. It’s always good to see which agents you like best because some are more knowledgeable than others and some offer better customer service than others. If you speak with a few of them, you can find which one you like working with the best. Some independent health brokers will even be able to offer you reduced prices on certain services such as human resources, payroll, and accounting due to the business relationships they have formed with these types of companies, effectively decreasing your business’ overhead expenses.
On a parting note, payroll companies typically DO NOT qualify as knowledgeable and helpful insurance agencies. There are a variety of large nationwide payroll companies that sell workers’ compensation and health insurance to their payroll clients. These companies tend not to provide their clients with price beneficial alternatives during renewal periods and are usually lacking in the customer service department. It is usually best to look for an insurance agency with a local presence and a focus on customer service.