Essential Questions to Ask
The Essential Questions to Ask When Choosing a Healthcare Benefits Provider In the Education Community
No topic is more critical in the US today than healthcare benefits and skyrocketing healthcare costs. Everyone is searching for the best benefits at the lowest possible costs. This is especially true in the education community in California where there are a multitude of choices in healthcare providers.
The need to balance premiums with benefits has never been greater and those charged with that responsibility, whether in a school district, union or a member of a benefits committee, must ensure that they have all the facts before choosing a provider.
- Are there fully funded reserves?
- Many providers do not maintain sufficient reserve
funds to protect districts and individuals in the event
of a shortfall during the plan year or if the district
chooses to terminate the coverage of a provider. If
a district terminates coverage with a provider, there
could be an assessment against the district and even
participants who pay a portion of their premiums for
claims that have been incurred but not reported. Look
for a provider who fully funds for this contingency in
order to reduce your risk and protects you against
potential catastrophic costs. Make sure you won’t be
asked by your provider to pay more money to cover
these claims, known as a run-out or buy-out.
- Are rates guaranteed?
- Many providers have no rate guarantees resulting
in the possibility of rates being raised during a plan
year. Some providers will guarantee the rates for a full
plan year protecting your district against having an
unplanned increase.
- How does the provider handle participant pre-existing conditions?
- Many providers will exclude pre-existing medical
conditions leaving some of your participants without
coverage for that particular condition. However, there
are a few providers who will accept everyone who is
eligible regardless of their health history.
- Do retirees have the same benefit access?
- With the multitude of baby boomers coming of
retirement age, many districts are concerned about
making sure they have access to the same benefits as
the actives. While that may be true, you may want your
retirees to have similar benefits even if they have to
pay a portion of the costs. Ask the prospective providers
what benefit packages are available to retirees.
- Do you have to sign multiple year contracts?
- Ask the provider about contract terms. Some want
contracts for three or more years. That ties your
hands if you are not satisfied with their service, rates
or benefits and want to change. Look for a provider
who only requests a one year contract. It minimizes
your risk and expands your options.
- Do you have to pay a brokerage commission?
- You may not see it in the premium but some providers
use brokers to sell their plans to school districts
and pay commissions. This has two impacts: (1)
Is the broker really looking out for your district’s
best interest or the commission? (2) Does the
commission inflate your premiums? Could you be
getting a lower rate without it? Look for a provider
who does not use brokers and pays commissions to
avoid these issues.
- Is the provider supported by both management and labor unions?
- Labor and management endorsement goes a long
way to ensuring that the provider is responsive to
participants needs. It will typically make benefit negotiations easier. Union endorsement often shows
a responsible focus on participants.
- Is the provider a non-profit?
- Why is a non-profit provider important? Stockholder profits do not have be considered which allows “profits” to be returned to the participating school districts and union members with lower rates, better service, no unfunded risks or a combination of all three.
- How is customer service handled?
- After the district has negotiated rates and plans and have been enrolled, the most important factor follows: service. Look for a provider whose reputation for customer service is exemplarily.
Ask the provider to explain how each district is handled by their member services group. Is there a dedicated representative inside the provider
who is assigned to the district? Is there an
outside manager who is a liaison between the district and the provider?
- Is the provider a Trust?
- Trust funds pour their profits back into making their plans and service better as previously noted. The most prominent of the non-profits are the “Trusts” which exist in California solely for the benefit of the education community.
Another form of provider is the Joint Powers
Authority (JPA) which is typically operated by
management only without labor representation
at the management level. Trusts are composed
of equal union and management representatives
and oversee the providers’ operations. Trusts
typically “pool” their resources so that all
member districts can take advantage of a
larger buying power. The collected premium
contributions are held in a Trust fund and used
only for payment of member claims and not for
other uses such as loans or improvements.