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The reasons you get surprised by your health insurance renewal every year

By now, your 2022 personal taxes are settled.

Were you pleasantly surprised by the amount you got back? Or were you one of the unlucky ones surprised that you owed money? Let that feeling really sink in for a moment.

If you are like most employers, that's exactly how it feels every year when your broker delivers your health insurance renewal. You hope you get the good surprise but more often than not it's the bad one. Either way, the anxiety leading up to your health insurance renewal is palpable.

So, why does this keep happening to you? Watch the video below to explore 3 reasons you keep getting surprised.

So let's dig into the first thing. Why? Why are you always getting surprised by your health insurance renewal? Well, it boils down to a handful of things, but in my opinion, it really starts with your broker. It starts with one, how good is your broker? Or do they know about all of the different opportunities that are out there in the marketplace? Do they know what fully insured is? Do they know what self-funded is? Can they talk about it and educate you on what those different options are? Are you even hearing about those different options as an employer? And if you're not, well, you might not be dealing with the best insurance broker right now, but the second thing comes down to incentives and what is your broker actually incentive to do? Are they incentive for your costs to increase? Are they incentive for your costs to decrease? Here's the biggest problem I see right now with the incentive structure for some brokers is this thing called supplemental compensation. In supplemental compensation is when a carrier pays a broker a certain amount of money for either selling a certain amount of new business with them or retaining your existing book of business. And I'm not necessarily saying that this is a bad thing, and all brokers that take this are bad. But what I am saying is that it can drive certain brokers decision1:18making process because in some markets, brokers are heavily reliant on this compensation to really stay afloat. Sometimes this can be upwards of 15% of an agency's overall revenue, and that revenue is an incentive to stay with the current carrier. And so you just gotta watch out for these types of brokers. Some are so reliant on this type of compensation, they're just blinded from all the other solutions that are out there in the marketplace. Another reason why you might be getting surprised by your health insurance rule every single year is because there's a lack of data. You know, someone once said to me, what you can't measure, you cannot manage. And that is so true. If you don't have a pulse on how your health plan is running, at least on a quarterly basis, preferably monthly, you're always gonna be surprised. So you gotta figure out ways to be able to get data. And I get it. There's problems, right? You got carriers that say, Hey, if you're under a certain number of lives, we're not gonna provide you any data. So you gotta understand, as an employer what data is actually available at your fingertips. The other big why I see, and this is so common, is just bad timing. And that a lot of times stems from the broker. Sometimes it's a tactic. Release the renewal as late as possible so the employer doesn't have enough time to make a decision. If you, as the employer are getting your renewal 30, 45 days ahead of the actual renewal date, and you gotta make decisions on employee contributions, on out-of-pockets, on plan, how do you have enough time to do all that, communicate it, and make any sort of material change? Poor timing is one of the biggest contributors I see to surprise. Health insurance renewals.

About the Author

Mike Kroupa, Self-Funding Insurance Expert

I grew up in a house that was constantly under construction and the experience helped me uncover one of my passions, remodeling. After running a successful remodeling business with my brother during college, I decided I wanted to keep this as a hobby. Instead, I took my advisor’s recommendation and started down the actuarial path, which ultimately led me to insurance.
Since then, I have focused my career teaching employers how to better manage their health insurance plans. I found myself frustrated year after year of doing the same thing because it didn’t feel like I was making an impact. Healthcare costs were continuing to increase, and it felt like the only options employers were left with was increasing deductibles, increasing contributions, and switching carriers.

There was a turning point for me in 2020 as I found Health Rosetta, an ecosystem for scaling adoption of practical fixes to our health care system. As my clients started adopting these fixes, I found myself getting passionate about what I was doing for the first time. Then I realized my hobby of remodeling was driving the passion because I was remodeling health plans. Even better, I was having an impact because patients (employees, spouses and children) were getting the best care they ever have and saving a lot of money in the process.

Get in contact with Mike: 

Phone: 630.738.1835     Email: mkroupa@gocgo.com     LinkedIn: Mike Kroupa

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