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How employers can get the best deal at health insurance renewal time
Posted on Dec 15, 2016 by Travis Jones
When it comes time to renew their group health insurance, not every company knows the factors that may help them to keep premiums from rising. Here, UAE Medical Insurance provides some insight into what you can do to save your company money on medical insurance.
Ever since the new healthcare reform law came into effect for all people in Dubai on June 30th, 2016, employers of all sizes are now practically guaranteed to have purchased health insurance for their employees. That is, unless they want to pay government fines that are much costlier than the insurance premiums they would have to pay on insurance that only meet minimum requirements set forth by the Dubai government. Of course, now that every employer in their right mind is providing insurance to their employees, many are opting to provide benefits beyond these minimum requirements. After all, if you’re going to do something, you may as well make sure that it is done right, and this certainly applies to health insurance.
Even so, employers that purchase pricier insurance policies that do a great job of providing valued employees with comprehensive medical insurance coverage are still going to need to mind their bottom line. With this in mind, UAE Medical Insurance is providing you with this informational article on how you can get the best deal on your group insurance policy when it comes time to renew it at the end of its term. Read on to find out the different aspects of group health insurance in Dubai that you should be aware of, as well as how they can be utilized in negotiations with your insurance provider.
Fair Loss Ratio
We’ve written entire articles about Fair Loss Ratios themselves and how they apply to your business. It is very important to know what your Fair Loss Ratio is, and even be able to predict what it may be in subsequent years, as this is a figure that insurance companies factor in heavily when deciding if your premiums should raise at policy renewal time. A loss ratio in general is the amount of money spent on premiums for your insurance versus the amount of money paid out on claims made against the policy by those it covers, which is expressed as a ratio or percentage.
Insurance companies, of course, want to make a profit on the products they sell, so they usually consider a Fair Loss Ratio to be in the range of 70-80% claimed against premiums paid. Any more than this and the odds of your premiums being raised rise considerably. As well, if the loss ratio is under 70% of premiums paid, your company likely isn’t getting the value it should from your insurance plan, and you should look at ways of addressing it. For example, the benefit levels could be lowered if it seems that they are more than is actually needed, or employees could be encouraged to use their insurance more often if they are found to be avoiding using it for some reason. Short of these options, premiums may even need to be lowered if you are being overcharged.
Deductibles and excesses
One quick and easy way that insurers can lower your premiums is by either implementing a deductible or excess on the policy, or raising an existing deductible or excess. A deductible is an amount of money that must be paid to the insurer before any claims can be submitted, meaning that inexpensive medical care may lead the insured to simply pay out of pocket, rather than pay a larger amount of the deductible in order to be reimbursed. Of course, catastrophic or particularly costly medical treatment will make it a no brainer to pay the deductible, as the amount reimbursed is likely to be much greater.
Excesses essentially work just like deductibles do, except that an excess will pay the full amount of maximum benefits beyond the excess amount, while a deductible will only pay the maximum benefit minus the amount of the deductible itself.
Another quick way to lower your premiums by saving the insurer money is to institute co-payment as a feature of your employees’ health plans. A co-payment would require that each plan member pay a portion of the total cost of an appointment or treatment. This payment could be a flat rate, such as paying AED200 on every visit to the doctor, or a percentage of the total cost, with 10% or 20% co-payments being somewhat common on health insurance policies.
Using lower cost providers
If a company examines how their group insurance policy has been used in the previous year, oftentimes they will find that the people using the plan are mostly using it at costlier private hospitals. After all, if the cost is covered, why not get the best care at the most renowned medical facilities? Well, the thing of it is that the insurance company may look at this trend and decide to raise your company’s premiums if usage of high cost facilities is above average. For this reason, it may be a good idea to encourage your employees to use public hospitals for their less pressing healthcare needs.
By being sure to attend a public hospital a certain percentage of the time, your employees can save money for the entire company in the long run, as this measurement is often looked at by the insurance company as a percentage of overall facilities used. The onus is not entirely on the company and the employees, however. Insurers and brokers are both willing to incentivize your employees to avail themselves of public healthcare at least a portion of the time. Insurers may offer cash incentives for the use of such facilities, while brokers like UAE Medical Insurance can give seminars to employees about the benefits of using public facilities.
Along the same line as encouraging employees to use lower cost healthcare, but even more drastic a measure, is getting a plan that provides a limited network of providers at which members can either receive better insurance benefits, or any benefits at all. This limits employee freedom when it comes to choosing care providers, but can lower premiums substantially.
Perhaps the most obvious way to lower premiums is to reduce the benefits that a plan provides. For instance, some companies may choose to no longer carry maternity benefits on their group plan, as this coverage can raise premiums significantly. A proper analysis of how employees have historically used a plan, and the specific conditions that have been covered, can lead you to figure out which benefits are not being used, which may lead you to decide that it is a benefit that can be cut to lower costs.
While insurance companies will usually look at the overall expenditure on your plan and use that as justification for raising your premiums, sometimes the numbers are exceptional. For example, if this year’s claims were significantly higher than the previous year, this will raise red flags for the insurance company, but if, upon further inspection, you find that a couple of employees at your company had received cancer treatments during the year that were particularly costly, but have since ended, you can make the case to the insurer that the year’s high level of claims is an anomaly that is unlikely to occur again next year. Insurers do understand this line of thinking, and may not raise your rates if you can make a valid argument along these lines.
Now, hopefully you’re well versed enough in the points above to start approaching negotiations with your insurer, but why not have an experienced and knowledgeable partner by your side that can give you an advantage? That’s where an established insurance broker like UAE Medical Insurance can really come in handy. By working with us to source the best group medical insurance plan for your company, you can utilize our expertise to ensure that you don’t miss anything when you enter negotiations with the insurers, as well as get detailed reports on why your premiums should or should not rise for the next term – and all for no extra cost to you! To find out more, contact UAE Medical Insurance today.