You hear all the time about insurance companies wanting you to bundle policies to save money. They claim by bundling health insurance plans, like medical, dental, vision, and life under one carrier, it makes managing your policies simpler and more streamlined, leading to big savings. But is that really the case? Here’s what you should know about the advantages and disadvantages of bundling health insurance for employers.
Advantages of Bundling Health Insurance
Since it’s always best to start on a positive foot, let’s look at the advantages of bundling health insurance. The main benefit is that all your invoicing and billing comes from one entity. You don’t have to worry about tracking multiple carriers and policies, since all your policies are with the same carrier. Putting all your policies with one carrier also relieves administrative tasks. Again, no tracking required.
Many insurance carriers do offer multi-line discounts, which could give you some relief when the premiums show up — though these savings are typically minimal.
Disadvantages of Bundling Health Insurance
While there are some benefits, there are also several disadvantages to bundling health insurance. The main disadvantage is that carriers typically specialize, not excel, across all coverage types. You’ll get decent coverage for all your policies, but not great coverage on any specific one.
Carriers that offer bundled plans often don’t offer multiple options for each type of insurance. You get the plan they have for each type of insurance. This leads to limited plan flexibility and customization, which is essential if you want your policies to match your organization’s needs. You also can’t compare different types of plans to find one that better matches your needs or budget.
Finally, bundled health insurance plans typically come with higher premiums for ancillary benefits, like vision, dental, and life. While you might save a bit on overall coverage, you’ll be paying more for additional benefits compared to if you shopped plans individually.
Strategic Benefits of Unbundling Coverage
When you unbundle health insurance, you gain the ability to choose specific plans that suit your company’s unique needs and budget. You can choose best-in-class carriers for each benefit, rather than working with a “Jack of all trades” that offers decent benefits for everything.
You get greater control over your budget and plan design, along with boosting your negotiating power, by working with multiple carriers separately. For most companies, bundling health insurance doesn’t offer any strategic benefit.
Long-Term Considerations and Best Practices
It’s common to think about your immediate needs when choosing health insurance plans, but it’s crucial that you also consider long-term impacts of your choices. After all, you’re still going to need health insurance in five, ten, or even twenty years.
The average employer changes medical carriers every 3-5 years. If you bundled your health insurance policies, that means you’ll have to re-shop for every single policy. Whereas if you chose policies individually, you may only need to replace one or two at a time as your needs or policies change. Keeping benefits separate simplifies transitions in the long run.
Find the Group Health Plan for Your Organization
Bundling health insurance may make sense if a truly competitive package exists, but the only way to find out for sure is to work with a knowledgeable broker. If you’re looking for employer health insurance, contact us at Health Benefits Associates. Our team of local agents will compare all options and scenarios to ensure you choose the right options for your organization — whether it’s bundled or not. Schedule an appointment by calling 775-828-1216 today.
