ABOUT THE COMPANY WE HELPED
- A Tech Company in Boston Massachusetts specializing in video games development.
- Co-founded in 1995, the group has 137 people and 2 locations.
THEIR CURRENT BENEFITS PACKAGE
The group through 2014 was fully insured with major healthcare insurer and has 120 of the 137 employees on the Plan.
Until 2015 the company incurred 10 to 20% increases annually. It is a traditional plan with normal co-pays and prescription drug coverage. The cost of the plan at year end 2014 was just shy of $1.2 million.
THEIR ISSUE
The employee benefits package was threatening the financial health of this company. They needed to reduce their healthcare operating expenses which represented 30% of the company’s revenue. The impact of this cost has hindered their ability to engage in high-growth projects and investments. They are unsure about the effects of Obamacare, compliance, and the potential fees and fines. The internal staff has spent many hours evaluating the potential changes, but the costs have continued to rise.
OUR APPROACH
We have 25 years of experience in evaluating thousands of fully insured and self-funded plans, performing assessments, offering advice, and implementing benefit solutions tailored to the needs of every company. We used this expertise during our first meeting and discussed the issues facing management, company goals, as well as obstacles that seemed apparent with their existing plan. We met with the management team and employees to focus on what was important to them, thus creating motivation and helping to instill joint employee/employer commitment.
EVALUATING THEIR OPTIONS
The assessment included the evaluation of fully insured and self-funded insurance programs.
First we looked at two fully insured plans. One was a contribution plan and the other was a high-deductible plan with a Health Reimbursement Account which could be viewed as a baby step toward self-funding. Next we explored the idea of a self-funded plan, with a deductible of $30,000. The self-funded experts at R&J Insurance used their experience to work with several A+ rated reinsurers and Third Party Administrators (TPAs) specializing in self-funding. We were able to show the same plan design with a United Health Care network.
| Current plan | Option 1: Fully Insured | Option 2: Fully Insured w/HRA | Option 3: Self-Insured w/ $30k deductable | |
|---|---|---|---|---|
| SAVINGS | - | -$119,324 | -$41,023 | $332,797 |
| PREMIUM | $1,237,480 | $1,356,804 | $1,278,512 | - |
| STOP LOSS PREMIUM | - | - | - | $267,991 |
| CLAIMS | - | - | - | $568,112 |
| ADMINISTRATIVE COSTS | - | - | - | $68,580 |
The group would save $332,797 in healthcare costs by implementingR&J Insurance’s self-insurance Program.
RECOMMENDATION AND IMPLEMENTATION
Once R&J Insurance completed its evaluation it became clear that a self-funded plan would stop the medical inflationary bleeding that had plagued the client for years. In 2015 the client implemented the $30,000 deductible, and the year-end cost for the plan in 2015 was running at $893,116, i.e. significantly below predictions.
In 2016 with the cost savings obtained in the previous year, the client will implement a wellness plan, onsite clinics, and telemedicine to help reduce the cost further by a projected 15%.