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Benefits Renewal Increases Explained

It's officially here. Its Benefits Enrollment season. Renewal season has come, and I am so excited to share with you. Now I'm an employee benefits consultant. So it's important for me to be excited about your health insurance renewal. But for you, small business owner, it may come as a headache every single year, you may have extra stress and tension and anxiety, because every year your benefits renewal goes up for seemingly no reason at all. Today, I thought that we would talk about some of the reasons why you may see an increase in your health insurance renewal for 2022.

I work with small business owners regularly, and it seems like the industry trend that's coming up with the renewals is an increase of between 5 and 10%. This year, for 2022. insurance carriers will say things like "we're raising the rates because of industry trend, or industry standard". And I want to explain to you what that means. But instead of in terms that health insurance providers use, I'm gonna use terminology for car insurance. So let's set - let's set the stage here really quickly.

Let's say you are at a car dealership, and you were so excited to get this brand new red sports car that's got two doors and a convertible, and you know that you can afford the payments, but you call the insurance company and you say, "Hey, I'm getting this new car, help me get insurance to drive it off the lot". And they say, "Sure, we'd love to help you. First, tell me what kind of car it is. Second, tell me about your driving record". Eek, your your car insurance provider is going to take the information and say, "Oh, you're getting a sports car, that's gonna raise your risk, we're gonna raise your rates a little bit. Oh, you're in a risky age category. You know, 30 year olds have more car accidents than 50 year olds. So we're gonna raise your rate up a little bit,

Oh, you've only gotten two doors, there's another risk", you get the -you get what I'm trying to say here. And at the end of the call, they'll tell you how much it costs. And you may say, "Wait, wait, I haven't had any claims ever. I never get tickets and I've never been in a car accident",

Well, in the small business health insurance market, there is a little bit of negotiation when it comes to your health insurance renewal if you're on a level funded plan. Unfortunately, if you're on a fully insured plan, you're pretty much just going to see the industry standard trend renewal. If you have less than 50 employees, that means, and you're on a fully insured plan, excuse me, then that means that you are going to be rated based on the age and location of your employee base. That's it. They don't care if they have all kinds of health claims. They don't care if you have the healthiest employees in the world, the insurance carrier on the fully insured small group space is only going to rate you based off of age and location. Now, the next thing I want to talk about is a level funded plan. Now this is where it gets good.

What happens in the health insurance small business level funded style plan, is employees are asked medical questions, in order to rate the risk of the group, just like a car insurance will ask all of the employees within the organization, the health risk of themselves and any dependents that might be on the plan, then the insurance provider is going to come in and say this is how much we think that the risk is going to cost you and this is your monthly premium. Now a whole year is going to go around and you're going to get your renewal on a level funded plan. And that renewal is going to be based a little bit on industry industry standards. But mostly it's going to be rated on the risk of just your group. So if your employees have had a super healthy year, you've had no major claims, no major emergency rooms, then you're likely to have a very low, to no increase in premiums. It gives your negotiating power a much bigger chance if you know the health of your group and you have the opportunity to negotiate that health with the insurance carrier.

I do have to be the bearer of bad news here, though and say that if you are not asking your employees for health underwriting medical questionnaires, then you might as well just expect to get that renewal year over year at an increase of at least 5 to 10%. If you have high claims in the fully insured market, you may even get a bigger bump than that.

Now, I hope I've explained it in a way that's easier for you to understand. My name is Niki Trentacosta, and I help small businesses shop for, implement, and administer their employee benefits programs. The most of my space is with clients who haven't had health insurance before, and so I like to help educate you and your staff on the best ways to utilize your benefits plan.

I can be reached at and on social media platforms such as Facebook, YouTube, LinkedIn, and Twitter. I look forward to helping you with your benefits renewal and can have a conversation with you for free. Just contact me and let's chat. I look forward to talking to you, and until we do speak, I hope that you stay happy, stay healthy, nd of course be sure to keep washing those hands. Bye!

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