Client Saves Over $16,000 in Health Insurance Premium
A client of WA Insurance Group, a small employer in Wisconsin, has a medical plan model that is a Health Reimbursement Account. Benefits are structured so that an individual is responsible for the first $1,500 of a total annual $3,000 deductible, with the second $1,500 contributed by the employer. The health plan would then cover all qualified expenses in excess of the total $3,000 deductible.
Upon renewal, the group received a large increase of more than 18%. The information received with the group’s renewal showed a loss ratio greater than 200% for the previous renewal period. However, more current HRA funding reports reflected very little claims activity for the 10 months directly prior to the renewal date. The group’s participant activity report showed a full balance in the HRA accounts for 85% of the enrolled employees. Only 3.5% of the enrolled employees at this time had met the total annual deductible.
WA concluded that the significant difference reflected between the past loss ratio and the current claims activity meant that any large claimants from the previous renewal period, which was used to calculate the loss ratio, had resolved their medical issues, or were no longer on the plan, reducing the group’s overall risk. Because of this information WA believed the large increase given to the group was not justified.
WA requested that the employer group’s current health insurance carrier reevaluate the increase that was given with the updated information.
The current health insurance carrier reevaluated the data and determined that the group’s past experience and projected risk, which led to the large increase in the group’s annual premiums, could be adjusted due to the current information. The group’s renewal increase was reduced by approximately 8% and resulted in over $16,000 in anticipated premium savings for the 2012 plan year.