Group Health Insurance Risk Management Strategies
During these unprecedented times, the challenge of managing the ever-increasing cost of health insurance has become more difficult. Employers should consider implementing risk management strategies that can help to avoid potential claims that drive health insurance costs.
This strategy requires employee access to information, education, and personal assistance regarding affordable personal health and Medicare options that can help reduce claims occurrence from:
- Employees working beyond age 65
- COBRA events
- New hires
Today, more people are choosing to work beyond age 65. By 2024, the U.S. Bureau of Labor Statistics project that the labor force will grow to about 164 million of which 25 percent will be age 55 and older. Employees 65 and older are projected to have a faster rate of annual labor market growth of any other age group…55 percent ages 65 to 74 and 86 percent age 75 and older.
Unfortunately, employer health care costs are higher when the age of the workforce is older. Employees aged 55 and older incur two to three times the number of claims than that of an employee aged 40.
A misunderstood and underused option for the growing number of employees working beyond aged 65 is to exercise their right to choose Medicare as primary health insurance in lieu of employer based coverage. Medicare plans like Medicare Advantage can provide employees an attractive, personal option, lowering their monthly “premium” cost when compared to their monthly payroll contribution. Plans are designed to provide comprehensive health and medical coverage not subject to a deductible, and include prescription drug, dental, vision, hearing and a variety of extras like over the counter supplies, meal, and transportation services at no additional cost.
Options to COBRA
Employers can also inform employees of personal health insurance options to the continuation of coverage under the COBRA law. The Medicare Rights Center reports that individuals choosing to pay the monthly premium to maintain extended use of the employer-based plan under COBRA law tend to:
- Be older, 50 years old, than the age of the full-time covered employee, 42 years old.
- Use health care more frequently. COBRA claimants had almost five times more hospital days and filled twice as many prescriptions than those covered at work.
- Have more chronic conditions. People using their rights under the COBRA law are more likely than those working with employer-base coverage to have chronic conditions like COPD, diabetes, cancer, high blood pressure, high cholesterol, mental health disorders, and musculoskeletal disorders.
- Spend more on health care. In 2018, full-time workers with individual employer-based coverage used an average of $6,724 in health care services, while those on COBRA used an average of $18,752.
New Hire Waiting Period
Approximately 75 percent of employers require new hires to complete a waiting period of up to 90 days before health insurance coverage begins. For good reasons, laws are in-place to protect individuals from discriminatory hiring practices based on health or pre-existing conditions. To “balance” the needs of the new hire and that of the company, Marketplace and Short-Term plans can be used to “bridge” the new hire waiting period gap in coverage for before employer-based coverage begins.
The creation of an ongoing, vibrant employee information and education campaign, review of plan design, monthly employee contribution, deductible and out of pocket maximum are key to the implementing of a comprehensive health insurance risk management strategy.