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Measure it, manage it, control it: your employee medical benefits
We are quickly approaching that time of year January 1. It is a date that represents a time when two out of three employers across Tennessee renew their medical benefits.
Chances are they are the second or third costliest line item expense you have, but if you are fully insured, how can you manage this expense when you have no data to measure? You know the answer, and as an executive it frustrates you immensely.
Every year, about two or three months prior to your policy anniversary date, you get this surprise increase that is impossible to plan for. Liken it to each year, all your employees banding together and coming to management for a pay raise that can vary from 5 to 50 percent. You have no control over it other than to acquiesce at some level.
Well, actually, you do. It is not a silver bullet, and it is not recommended for every employer. What is recommended is that every employer at least has their adviser evaluate it on their behalf. The answer is self-funding your medical benefits. It comes in a variety of flavors, and each of them is financially sound when provided the right information.
I know what you are thinking. In your mind, you are saying, "Self-funding scares me. I have heard horror stories," or, "We were once self-funded, and it was a disaster." Times have changed.
So why self-funding now? No state premium tax, no insurance carrier profit margin and no ACA health insurance tax are just a few reasons. Just these three can account for as much as 10 percent of your premium yes, you read that correctly. Yet the biggest reason is control. You can finally take that huge, unpredictable, annual surprise and begin to control it into something that is budgetable and predictable. You will have data that will allow you to make appropriate and meaningful decisions.
In your business today, you manage what you measure at every step. Now you can finally (and safely) do the same with one of your costliest line item expenses. That has to make self-funding at least merit an evaluation. I'll bet you lunch you won't regret it.