If you’re new to group benefits and searching the market for quotes or reviewing your current group benefits plan you should take into account how long your rates will be locked. Most plans will have a first year rate lock for 12-16 months, after which your rates are re-evaluated annually and subject to change.
Therefore, when considering to start a group benefits plan for the first time or changing providers you should consider; how long will the savings or lower rates continue?
What happens once the rate lock period has expired?
When your rates are subject to change this is referred to as your “renewal”. Renewals are when the insurance company reviews the claims your group made and premiums paid to determine if your rates should be adjusted. A group that made several health and dental claims will often see their rates increase. Other factors that impact your renewal are; general inflation, change in group demographics (employees get older every year) and cost of the services your group benefit plan covers. For example, if the cost of x-rays increases by 200% and your benefits plan covers these x-rays – you will see a portion of this reflected as higher rates.
What can you do to help control renewal costs?
There are several approaches to ensure your low rates and/or savings remain beyond the annual renewals; plans design, coverage maximums and employee co-pay are a few of the strategies that can help control your rates. Outside of these options are things like renewal caps which can be negotiated with insurance companies to ensure rates remain low for a longer period.
If you’re interested in implementing these strategies to help your group save while still providing employees with value-add coverage, please contact us.