Good Time To Be Shopping For Health Insurance Plan

By Keith Regan, Boston Business Journal

Richard McGrath, president of McGrath Insurance Group Inc. in Sturbridge, has a customer base that includes many traditional and technology manufacturing companies trying to figure out methods to save on their employee benefits budgets.

Regulations limit how high deductibles can be on health plan and still qualify as coverage under the state’s mandatory insurance law, McGrath noted, but for most companies, there is room to adjust.

McGrath says companies can gain savings and avoid overburdening employees by using health reimbursement accounts, or HRAs, through which an employer sets aside a fixed amount to cover health care expenses- funds that can be used to reimburse an employee for qualifying expenses including deductibles. Unlike an employee’s health care saving’s account, or HSA, an HRA can be rolled over from year to year and offers tax advantages for employers.

“It’s a good time to be shopping because there have been changes within the marketplace,” McGrath said. “Certain types of businesses that may not have been a market for a carrier may now be something they’ll look at. Carriers are constantly changing their underwriting criteria and may have more of an appetite for a business than they did just a few years ago.”

Broker and agents who deal in corporate health insurance plans are seeing plenty of business activity as the economy continues to sputter.

For a host of reasons, now may be an ideal time for businesses to find savings in their health insurance costs, which have been rising at twice the rate of inflation for the past decade, according to Jim Edholm, president of Business Benefits Insurance Brokerage Inc. in Andover.

“The guy who two years ago was focused on growing his business and didn’t worry about what his health insurance costs were is suddenly a lot more interested in looking at alternative proposals and alternative funding mechanism,” said Edholm, who says his business grew 24 percent in 2008 as companies searched for savings.

The downturn offers a chance to pass on costs or change plans without fear of workers jumping ship over a modest change. “No one wants to pass the cost on, but the fact is if you are ever going to make changes with a minimum amount of employee dissatisfaction, now is the time to do it. A lot of people are happy to have a job,” Edholm said.

Pat Haraden, a senior vice president at Longfellow Benefits in Boston, said businesses are currently dealing with additional regulatory requirements in the health benefits arena because the federal stimulus package contains additional COBRA benefits for laid-off workers.

The sputtering economy also creates more of a buyer’s market for health benefits, Haraden said, with plans seeing the number of end-users on their rolls falling as the unemployment rate spikes.

“The health plans themselves are motivated and they are coming up with newer products, most of which are less expensive in terms of premiums costs to the employer,” Haraden said. “With a competitive bidding process, a business might be able to find some significant savings at a time when everyone is looking every where for ways to cut costs.”

Edholm said giving employees choices can help them understand the costs and also enlist them as allies in efforts to keep costs down. He told of a colleague whose soccer-player daughter needed an MRI on her knee. The first hospital he asked charged more than $1,000, as specialized MRI clinic in one location gave a fee of $725 and a third location charged less than $500.

“That kind of a spread is not uncommon and the new plans are giving the opportunity to reward that kind of effort in shopping around,” Edholm said.

According to Edholm and others, Massachusetts has long had a legacy of providing top-of-the-line health benefits for employees, while workers in other parts of the country are far more accustomed to plans that more equally divide the cost burden. More businesses are moving in that direction, embracing higher-deductible plans, plans with higher co-pays and innovations such as hybrid plans with Healthcare Reimbursement Accounts.

“Everybody else is way ahead on the curve and we are finally starting to catch up,” Edholm said. “For a long time, it was just a given that you had to offer a top-of-the-line, Cadillac health plan to attract and keep workers and now that’s being looked at more closely because of the economics.”

FAST FACTS

  • As the economy continues to sputter, many companies are re-examining their health insurance offerings.
  • Companies are dealing with more regulatory requirements, such as additional benefits for laid-off workers through the federal stimulus package.
  • On the other side of the spectrum, companies can find savings from carriers, which are highly motivated to offer new products that keep employee costs lower.