Financial Underwriting
Underwriting Methodologies To Develop Benefit Renewal Projections

When it’s time to find out about renewal rates from your company’s health insurance carrier(s), do you just cross your fingers and hope for the best? If so, then you’re probably bitterly disappointed each year when you see how much your healthcare plan expenses go up. But it doesn’t have to be this way. While it’s unlikely that healthcare will suddenly become more affordable, there are ways to control costs. One tool is data, which can be used to predict likely outcomes. At LHD we see what insurance carriers do and use the same underwriting methodologies to develop renewal projections to identify issues in order to proactively address them to mitigate cost increases while still achieving desire health benefits outcomes.


Marketplace Evolution and Your Health Benefits Plan

The health insurance marketplace is in state of constant flux and evolution. And while the Affordable Care Act (Obamacare) has slowed cost growth in healthcare, it still gets more expensive each and every year. Your company has little choice but to absorb health insurance premium increases, though some portion might be passed to health plan beneficiaries in the form of increased premium shares. The complexity of administering health benefits plans in an ever-changing environment adds another layer of cost and uncertainty. Underwriting practices at your health insurance carrier(s) determine your renewal rates, but you don’t have to wait for them before you explore cost management options. LHD can help.


How Trend Impacts Renewal Rates

The word “trend” as it relates to renewal rates means a prediction of how much insurance costs will increasing during the next year. Every carrier has their own way of determining trend, although there are some common threads. The mix of things they look at will likely include analyst forecasts, their own experiences, current care inflation rate, and so on. Trend will play a significant role in the underwriting process of determining what your health benefits plan will cost your company.

If your company doesn’t changed fixed plan benefits such as copays and deductibles while the price of healthcare increases, then your costs will increase (this is called deductible leveraging). And of course healthcare costs are going to rise, not just because of regular care inflation, but also when cost-shifting occurs. This is when healthcare providers make up for discounted payers (the uninsured or government workers) by shifting some of the cost of that care to other payers. There can also be impacts on benefits use due to new technologies, treatments, drugs, and so on.

At LHD we understand the kind of data that goes into how carriers determine trend in order to help you make better decisions about the design of your health benefits plan to help in controlling the plan expenses that impact your bottom line. Our solution is data-driven while remaining people-focused.


Data: A Tool for Identifying and Recommending a Solution

A data-driven approach is only as good as the accuracy of the data used. This is why at LHD we cast a wide net to gain access to a wide variety of accurate data, including claim data, enrollment, growth, adjustments, trends, fees, and plan changes.

We use advanced tools to model different changes to your medical and pharmacy benefit plans so you can see the impact those changes would have. This is the key to exploring options for aligning with your budget and financial data to mitigate rising costs. What will the impact be on employees if you have to change the cost-share with them? Will the changes still allow for achieving population health goals and align with the company culture?

But we don’t stop there in our quest for insightful data. Our process includes tapping into the largest and most comprehensive employee benefit plan tool in the world for accurate benchmarking. With data on more than 19,000 employer plans, we are able to evaluate the impact of geography, industry, and group size on your benefit strategies.

Finally, we thoroughly assess all expenses related to the benefit plan and update the projected budget with the final headcounts. Any ad hoc reporting is completed, and then the preparation for your company’s next renewal is well underway with full transparency at every stage so you know what’s happening and the thinking behind it.

When we offer a recommendation regarding valued employee benefits to a client, you can rest assured it is based on the latest and most accurate data available, is aimed at risk management for your company both in terms of cost and population health. This is how we deliver a high-performance health benefits plan that leads to an optimal outcome for your company.


Working with LHD for Better Employee Benefits Management

Your company values its employees and wants the very best for them. That is always our starting position. But there are also limits to what your company can spend on providing robust benefits to every employee, even when it comes to benefits like health insurance. When you work with LHD, the process if one of transparency and collaboration. After all, we both want the same thing: To a high performing health benefits plan is designed and delivered that does right by your employees while controlling costs as much as possible. And once a plan is in place, we set up a feedback loop to make sure any pertinent changes are measured and reported in order to provide the insight you need to make the optimal decision each and every time.