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Holy Heck! Medical Benefit Cost Increases...

My company is on TriNet. Now moving aside the typical issues we have with TriNet (high fees for services you don't use), I typically find them reasonably competitive on actual medical coverage cost. I just got our 2010-2011 benefits cost estimates from them (we renew in late Q3) and I do not believe their benefits cost increase. Tough to do apples to apples b/c, like the mattress folks, they like to change plans a bit year to year to make these comparisons more difficult (you think we don't know this - we do). But when I line up plans that are reasonably close to one another I am seeing increases of ~30% to ~70%, often with somewhat lower coverages. That is incredible - almost a doubling of benefits cost in some instances, and a 50% increase as a rough average. Are other people seeing this, or is it just my company getting killed here? Is this a TriNet thing only or are those going direct or via brokers with their benefits seeing this as well?

Answers

Brad Butler
Title: SVP
Company: Merchants and Manufacturers Bank
(SVP, Merchants and Manufacturers Bank) |

Same here. We go through a broker to get our coverage from Blue Cross/Blue Shield. Small group (about 40 insured). Our quote for renewal is 30% over last years rate. Blue Cross/Blue Shield of Illinois is part of a larger mutual company. Been thinking of leading a policy holder revolt. Profits and reserves seem to be overly adequate, but no idea what their actuaries say. As far as the increases, elections have consequences. I think the insurance companies are front loading increases because they don't know if they will be able to increase rates without more government intervention going forward. Our biggest concern is how to keep coverage affordable for our lowest wage workers.

Kurt Kipfer
Title: CFO Emeritus
Company: International Medical Group, Inc.
(CFO Emeritus, International Medical Group, Inc.) |

what might appear as insurance "front loading increases" might actually be indicative and in direct response to the medical and healthcare delivery system in the USA ramping up their billed charges for services and medical devices in light of the upcoming healthcare reform act which greatly limits hospital/provider/doctor reimbursement rates. Just a thought. Insurance is generally reflective of pooling large medical costs and spreading them out among many insureds. Insurance is a financial mechanism to spread risk/cost. It doesn't set the cost. It spreads the cost.

Raffy Ohannesian
Title: Managing Partner
Company: Group Phoenix Advisors
LinkedIn Profile
(Managing Partner, Group Phoenix Advisors) |

TriNet is my 'go to' PEO for several reasons, not least of which is competitive pricing of benefits. TriNet has little to do with benefits pricing, other than being able to manage their PEO employee pool down to the lowest risk roles and companies, in order to go to larger carriers and offer plans at a PEO discount. Their services are very relevant to the markets they serve, and their employees per rep ratios are among the best in the industry. If we are looking for scapegoats in terms of medical insurance costs rising, there are a few places we can point to, most can be found along Pennsylvania Avenue in DC.

Mark Stokes
Title: CFO
Company: Private
(CFO, Private) |

Believe me, Raffy, I'm not interested in scapegoats (TriNet is my "go-to" as well for small companies). I am, however, interested in seeing if anything can be done to save my company and my employees money on benefits. If everyone is seeing this increase, whether from a PEO, a broker, or going direct, then there is probably nothing I can do. But I would like to hear whether others are seeing these increases. Thank you.

John Hunt
Title: Controller
Company: US Spine
(Controller, US Spine) |

Our Company also has Trinet and we just received our increases for this year's medical benefits. Upon receiving these I started shopping and have found lower costs in medical benefits from other PEO's. I would suggest doing the same.

Chris Hansen
Title: CFO
Company: Chatsworth Products, Inc.
(CFO, Chatsworth Products, Inc.) |

Medical costs will continue to rise as long as the drivers of medical costs continue on their present path. Our company has seen an increase this year in the 15% range and has to do with many factors but the biggest driver is the trended costs of medical care for our employees. Unless you can find a way to decrease demand for medical care (which is difficult with pharmaceutical companies marketing direct to consumers and physicians being incented for writing prescriptions not to mention the overall trends in unhealthy lifestyles) these cost increases will continue. Safeway Corporation has created a very successful model that revolves around wellness programs that includes a carrot and stick approach. Wellness programs, if structured properly, seem to be the way to stem the tide on medical cost increases. We are looking into implementing a wellness program starting this year.

Michael Jameson
Title: VP Finance
Company: Undisclosed
(VP Finance, Undisclosed) |

We are also getting major cost increases. My broker explained it thusly, "the insurance companies don't know what's coming down the line, so they are pushing through as much increase as possible while they still can". In other words, the increase is for no reason other than fear b/c the insurers simply don't know what the overall cost impact will be for them. Don't worry though, when it turns out to be less expensive I'm sure we'll all be getting a refund.

David Chemerow
Title: COO & CFO
Company:
(COO & CFO, ) |

We were told to expect a 23% increase for next year. Instead we plan to go self insured and expect to be flat. We have a slight advantage in that having 250 employees, we're big enough to self insure.

Kurt Kipfer
Title: CFO Emeritus
Company: International Medical Group, Inc.
(CFO Emeritus, International Medical Group, Inc.) |

self-insured is an excellent way to save medical costs for the employer by assuming some of the employee healthcare risk is return for far lower cost. If the risk is too much for an employer to accept, employers with as few as 15 employees can effectively and efficiently purchase medical stop loss insurance to cap their risk to a level that is acceptable. a very common strategy implemented by thousands of small and medium-sized employers.

Jeff Taylor
Title: CFO
Company: Communications Co.
(CFO, Communications Co.) |

Pardon my ignorance. I have heard of this many times but have not done it.

Earl White
Title: CFO
Company: XL Specialized Trailers
LinkedIn Profile
(CFO, XL Specialized Trailers) |

Self insured plans shift the risk to you. The components are the actual out of pocket costs, stop loss limit cost and administrator (Third party administrator) costs. TPA can be performned by the insurance company. It can appear to be a lower cost, but remember that you need to have incurred but not recorded costs accrued on your balance sheet. Fully insured planss have this built into the premiums. Your broker can provide a proposal to compare to your current plan.

Mark Stokes
Title: CFO
Company: Private
(CFO, Private) |

Interesting, so you are your own insurance pool. Sounds tempting, but also risky. So if you have people with major health issues you could take a beating with this plan up to a ceiling (the "stop loss limit"), but if you are a healthy company you could come out well ahead. Is that accurate?

Earl White
Title: CFO
Company: XL Specialized Trailers
LinkedIn Profile
(CFO, XL Specialized Trailers) |

You can set the stop loss at any value. For example, it could be $50k, $100k or higher. The lower the stop loss, the higher the cost. You need to do the math. Look at your company's history and use that to proejct. Size matters, so smaller groups don't always work.

Kurt Kipfer
Title: CFO Emeritus
Company: International Medical Group, Inc.
(CFO Emeritus, International Medical Group, Inc.) |

Absolutely correct. Employers with younger or healthier workforces benefit dramatically from self-funding. Although, if your fully-insured carrier is rating you up for a older or unhealthy workforce, which it almost assuredly is doing, you will benefit with self-funding this workforce population too.

Gerald Norris
Title: Investment Advisor Rep
Company: IAI
(Investment Advisor Rep, IAI) |

As predicted, the out of control health industry has ground out yet another round of increases and another year of profits in an economy looking for recovery and relief for it's middle class. The reform sought last year was not to the rescue for business or for individuals who seek protection. Why anyone here could be surprised by their annual 30% increase in insurance cost (which has been going on now for years) is beyond me. Oh - by the way- next year is going to have another increase just in case the last 5 years got by you.

Kurt Kipfer
Title: CFO Emeritus
Company: International Medical Group, Inc.
(CFO Emeritus, International Medical Group, Inc.) |

unfortunately, you are probably right. the healthcare reform act will stress our healthcare delivery system to its max. as demand increases, prices/cost will increase. and as costs increase, insurance rates will go up accordingly. expect insurance rates to raise as fast, if not faster, as you have experienced over the past several years.

Joseph Bowman
Title: VP Distribution
Company: The Payroll Source
(VP Distribution, The Payroll Source) |

PEO's in General, offer less expensive rates simply through adverse selection or the ability to decline unhelathy groups/ Clients. Selective underwriting on the front end for the PEO makes for attractive Rates. Some, not all PEO's have both Pool plans and the ability to place your group with a select few carriers, much like a broker would. Trinet requires partisipation in the PEO plan if you currently offer health insurnace even if you don't have 50% partisipation. Trinet was Gevity for those who may not know.... Big company. The admin cost vary from PEO to PEO. Shop it... Saving money and getting raving fan service trumps name recognition.

Lo Schendl
Title: Partner
Company: Walkabout
(Partner, Walkabout) |

agree with prior posts...i work with several mid-size employers (most self insured) and they are getting killed on the medical stop loss. We are considering the creation of a group captive as a means to save costs and control our own future. I am hearing smaller employers (25 to 100 ee's) are considering the self insured route and grouping with their alliance or association to be a part of a RRG or Captive (a number of companies already manage their work comp and property/casualty insurance this way). Hope this helps.

Ken Mason
Title: Controller
Company: Pascua Yaqui Tribe
LinkedIn Profile
(Controller, Pascua Yaqui Tribe) |

There's no such thing as free medical care.

fred patton
Title: cfo
Company: xyz
(cfo, xyz) |

If you think health care is getting expensive wait till it is free. The recent healthcare legislation which was to reduce costs had these features. a) add 20 million uninsured to those covered, b) cut medicare reimbursements to medical institutions by 40% but the health care institution cannot reduce their costs by that much overnight, c) require coverage for pre-existing conditions even if they have never been covered previously d) etc, etc. Now tell me the costs are going down. who else to pay all of this but we who provide insurance to our employees. Just wait things are going to get far worse with this new legislation.

Ivonne Martinez
Title: Financial controller
Company: Me
(Financial controller , Me) |

Has any used PEO - namely or Justworks. I shopping for the best price. Not a lot of hidden cost!

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