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Laws of Attraction Prevail: Taking Control of the Health Benefit Renewal Process
When selling a house, most of us don’t invite buyers over with dirty laundry on the floor and a sink full of dirty dishes. We know that showing a house at its worst can make it more difficult to sell and probably cost us money in the long run.
However, when under pressure – relocating for a new job or too busy with the other things we have going on – being satisfied with a little less probably feels okay.
The same holds true when organizations negotiate their medical benefit renewals. While insurance carriers are attracted to healthy, low-risk employers, employers tend to wait for a significant increase before they test the market. In other words, they wait until they are at their worst.
As a result:
- There’s a rush to find a better deal instead of better benefits
- Traditional markets may not have interest and decline to quote
- The employer may no longer qualify for preferred programs
- Lessening benefits or shifting more cost to the employees becomes the only option
In this reactive state, employers are pressured into making poor decisions for the business and its employees. Shifting the cost burden to employees can cause employees to consider job changes and make recruiting and retaining a good workforce more difficult. Being reactive is not good for any business in any situation, and yet, many miss the opportunity to enhance their medical benefits programs when times are good.
Rewards for Good Performance
At Oswald, we certainly come across organizations satisfied with single-digit increases. These businesses typically have a healthier-than-average workforce and good claims history. As a result, they tend to get favorable rates. However, many are content with those kinds of results and move on to more pressing matters rather than take advantage of the situation.
Generally speaking, employers experiencing single-digit or flat increases probably have a decent loss ratio and are considered desirable by their insurance carriers. What’s attractive to the incumbent is also attractive to other carriers ready to compete for the business. Interested carriers can even sweeten the deal with lower rates, discounts for bundling coverages and other added value that can benefit your company and your employees with minimal disruption.
Lower loss ratios can also translate into access to preferred risk pools. Pooling low-risk companies – those actively engaged in health and disease management or those with a healthy employee population – inherently drives better outcomes.
Such arrangements can drive down the total cost of care by rewarding good performance through incentives, premium discounts, renewal credits and even complimentary fitness center memberships. It should be no surprise that these programs regularly outperform traditional health plans.
Make Changes When Large Claims Hit
Unfortunately, bad things happen to good people. Rather than react once a big claim hits, there are some things you can do to minimize the risk of higher costs.
First, keep your options open. With time on your side, maintain relationships with carriers so they are familiar with your group for when you need them the most. Sell them on your company’s overall risk reduction strategy, health management initiatives, company culture, etc. – anything that shows that you are an employer of choice and that you are a good risk for them now and in the future.
Remember, carriers are in the business of buying your risk. The more they know about your efforts to improve risk, the better the results will be.
Second, health risks drive costs, plain and simple. However, overuse and misuse of health services and poor consumerism compound the escalating cost. Therefore, educate your employees on how to find the same service at a lower cost, provide them the proper tools and don’t be afraid to hold employees accountable for the choices they make. In the end, eliminating unnecessary ER visits or utilizing telemedicine instead of urgent care centers will save money for them and for your organization.
Furthermore, encourage employees to establish relationships with primary care physicians. Without those relationships, people tend to run to the ER, self-treat or ignore the problem.
When they have primary care physicians, you’ll find that some employees discover health conditions they didn’t know they had. For example, high blood pressure can be devastating to one’s health if left undiscovered and unchecked. Earlier detection can lead to better management of the condition and result in happier, healthier, more productive lives and lower doctor bills.
Lastly, transferring less risk to an insurance company is another way organizations can reduce spending on care. Therefore, consider simple things such as adding a health reimbursement account, offering direct primary care or even looking at less risky self-funded models like a group captive. You may be able to lower the cost of insurance by buying less of it.
Act When You Look Your Best
Remember, approach your next medical renewal like you are selling a house. If your house is not in the best selling condition, then work with an advisor who can help you clean it up.
Hope is not a strategy and if you find yourself hoping for a decent renewal, then there are probably things you could do to improve your position. Even if you are used to a 5%-10% annual increase, how sustainable is a trend like that five or 10 years from now?
Having a good understanding of your risk profile, giving yourself enough time and partnering with a proven advisor can put you in the best position for financial success and help you build a healthy, productive and more attractive workforce.
Oswald can help you look for ways to trim costs while providing ample benefits for your employees.
Ron Boynar
Sales Executive, Employee Benefits
216.367.4936
rboynar@oswaldcompanies.com
This article initially appeared in 2018 and was updated in 2025.
