Nevada small businesses have been looking for every possible way to save money regarding healthcare expenses. They’re forming Association Health Plans to pool together and reduce the cost. Nevada small businesses are looking into alternative funding such as the Aetna Funding Advantage product. And it’s working. A large amount of savings has been realized by both companies and employees when these systems work. But how far is too far when it comes to cost savings. How many of these systems are simply shifting the burden on to the employees instead of reducing the overall cost?
Many of the new plans promoted by insurance companies are cheaper than the options available in past years. Today healthcare expenses are still at an all-time high. The only way to make the plans cheaper is to cut some of the benefits. Large group plans, association health plans, indemnity plans, and short-term plans accomplish this. They reduce the price by reducing the benefits. Some of these reductions may be good. For a group of all single males, maternity benefits are not necessary. Or for a group of only adults covered, pediatric dental is unnecessary. However, when you add that wife or child, these benefits may become more important. Nevada small businesses need to take a close look at all of these options to see if the risks are worth the savings.
Large Group Plans
Joining a large group plan such as the Aetna Funding Advantage can be a great way to go. This large group product is similar to what Hometown Health released a few years ago called the ABC Plans. The idea is to bundle several small groups together to create one large group. As a large group, you generally received a larger doctors list, lower and more stable rates. They are also exempt from several parts of the Affordable Care Act including mandated benefits.
Where the Hometown ABC plans differed from the Aetna AFA plans: Hometown required the employers themselves to do additional reporting at the end of the year. This included a 1095C form that needed to be sent out to every current and former member of the plan. Additionally, Hometown had 3 separate companies depending on what type of claim it was. You would be either dealing with Hometown, a different pharmacy benefit manager or a third re-insurer if the claim was large. These issues are not there with Aetna AFA plans.
Association Plans
This year in southern Nevada, Health Plan of Nevada released association health plans. This allows Nevada small businesses to bundle together. They need to have a tie other than health insurance, such as builders or in another related field. These plans were just released and it will be interesting to see how these plans run this year.
Indemnity Plans
The more employees are willing to be hands-on with the health insurance, the more money they will save. Plans that work on reference-based pricing rely on employee involvement to reduce the cost. For example, many people have experienced the “cash discount” when using dental services. The dentist may charge one rate to the insurance company and another lower rate to customers who pay cash. The same is true for MRI services, hospitalization, and almost every other medical cost.
Reference-based pricing attempts to set these prices based on a national standard. The goal is to have the doctor avoid charging the insurance company 10x what they would charge a member for the exact same service. The main issue: when there is a gap between what the insurance company thinks is a reasonable rate and what the doctor thinks is a reasonable rate, the member is left with the bill. Sometimes advocacy groups can help but by this time it’s a very frustrating experience for the employee. For many Nevada small businesses, this is not an option.
To summarize
It’s not a bad idea to explore one of these options, but do it with a professional. Know what you’re getting into before you buy it.
