Question 1

How do underwriters actually price our renewal?

Accepted Answer

Your renewal is a number the carrier decides, not one it simply calculates. The underwriter projects your claims, adds trend, blends in a manual rate based on credibility, applies pooling charges for large claims, then adds retention for admin, taxes, commissions, risk, and profit. Every one of those inputs has a range, which is why two carriers can look at the same data and come back 15 percent apart.

Question 2

When should we start working on our health plan renewal?

Accepted Answer

Five months or more before the effective date. Requests for quotes typically go out three to four months before renewal for fully insured groups and four to five months out for self-funded and captive groups, because stop loss quotes and lasers depend on current large claim detail. Most renewals fail because they start 60 days out.

Question 3

Why did our renewal go up when our claims were good?

Accepted Answer

If you are fully insured, very little of your renewal is based on your own claims. It is driven by a large, generally unhealthy risk pool, and when your claims come in under what the carrier priced, the carrier keeps the difference. Changing how the plan is funded, even with the same carrier and plan, is often what fixes it.

Question 4

Fully insured, level funded, self-funded, or captive. Which is right for us?

Accepted Answer

It depends on who you want holding the risk. Fully insured is the simplest and least transparent. Level funding is the usual first step for a healthy group and is most common under 200 employees. Self-funding gives you all the data and keeps the surplus, in exchange for volatility. A group captive gives self-funded employers the same economics with less volatility by sharing a middle layer of risk with peers.

Question 5

How do I compare two level funded quotes?

Accepted Answer

Look past the monthly rate. Check how much of the premium goes into the claims fund (some carriers put about 50 percent there, others 60 to 70 percent) and how much of any unused surplus comes back to you (50, 67, or 100 percent). Two plans with identical rates can be hundreds of thousands of dollars apart on those two numbers alone.

Question 6

Should we self-fund through a big carrier or an independent TPA?

Accepted Answer

A carrier ASO bundles the network, PBM, care management, and often stop loss into one vendor, which means strong network contracts and simplicity but less flexibility and less data. An independent TPA lets you pick each piece separately and gives you full claims data, with more moving parts. Spread-out workforces that want simplicity usually fit a carrier. Concentrated workforces that want control usually fit a TPA.

Question 7

What is a group captive, and who is it for?

Accepted Answer

A group captive lets a set of like-minded self-funded employers share a middle layer of risk. Each employer pays its own smaller claims, the captive pools the mid-size claims across members, and a reinsurer covers the catastrophic layer. It is self-funding with less volatility, and it works best for employers committed to managing cost.

Question 8

What should I look for in a stop loss contract?

Accepted Answer

Four things decide how a stop loss contract behaves in a bad year. The specific and aggregate levels, the contract basis (12/12 vs 12/15 vs 24/12), lasers on individual claimants, and renewal protections like a no new laser rider and a rate cap. Also check for terminal liability coverage and any commission built into the premium.

Question 9

How do PBMs make money, and are we actually getting our rebates?

Accepted Answer

PBMs earn money from manufacturer rebates, spread pricing, and fees, much of which you never see. Most rebate contracts guarantee a fixed dollar amount per brand script, not a percentage of what the PBM collects, and some rebates are now paid to PBM-owned aggregators as "administrative fees." The first page to read in any PBM contract is the definition of "rebate."

Question 10

Should we cover GLP-1 drugs for weight loss?

Accepted Answer

Covering GLP-1s for diabetes is standard. Covering them for weight loss is a real budget decision with four options. Don't cover, cover with guardrails (BMI thresholds, prior authorization, a lifestyle program, reauthorization on results), carve out to a specialty program, or cover broadly. Whatever you choose, put it in writing, budget it honestly, and communicate it clearly.

Question 11

What does a 60 percent network discount actually mean?

Accepted Answer

Usually very little. Discounts are quoted off billed charges, the hospital's list price, which almost nobody pays. A 60 percent discount on a $40,000 charge still pays $16,000 for something Medicare pays $5,000 for. The better yardstick is what you pay as a percent of Medicare, by hospital system.

Question 12

What is reference-based pricing, and is it risky for employees?

Accepted Answer

Reference-based pricing pays providers a set percent of Medicare with no contract in place. It can save real money, but because the provider never agreed to the price, it can balance bill your employee for the difference. A direct contract at a percent of Medicare avoids that, and any RBP program should come with member advocacy and legal support.

Question 13

What is direct primary care, and does it work with an HSA?

Accepted Answer

Direct primary care gives employees unlimited access to a primary care doctor for a flat monthly fee, with no copay. The value is downstream, keeping people out of the ER and the hospital. Starting in 2026, DPC no longer disqualifies an employee from an HSA as long as fees stay at or below $150 a month for an individual or $300 for a family.

Question 14

What is site of care navigation, and does it actually save money?

Accepted Answer

The same MRI, colonoscopy, or infusion can cost two or three times more in a hospital outpatient department than at an independent imaging or surgery center. Navigation programs guide employees to high-quality, lower-cost sites before the claim happens, usually with an incentive. It is one of the fastest ways to cut spend without cutting benefits, as long as savings are measured honestly.

Question 15

How do we switch benefits brokers, and will employees notice?

Accepted Answer

You sign a short broker of record letter that tells each carrier and vendor which broker represents the account. Once the carrier accepts it, the new broker can request data, negotiate, and service the plan. Changing brokers is common and normal, and a good transition is quiet. Employees should never notice.

Question 16

How does my benefits broker get paid, and how do I find out?

Accepted Answer

Brokers are paid by percent of premium (roughly 2 to 7 percent), a flat per employee per month fee, or a flat annual service fee. Hidden compensation, like stop loss commissions, PBM per-script fees, and carrier bonuses, is where most problems sit. Since December 2021, brokers expecting $1,000 or more from an ERISA health plan must disclose their compensation in writing, so ask for the disclosure.

Question 17

Should we get quotes from more than one broker to get the best rate?

Accepted Answer

No. When several brokers shop the same group, each one gets the same proposal, which blocks the market, and underwriters stop investing in a group nobody controls. Pick one broker with a clear strategy, sign a broker of record letter, and let them create competition among the carriers.

Question 18

What one question tells me whether my broker is doing their job?

Accepted Answer

Send one line. "Please send me the last 24 months of premium vs claims and large claim data." A broker who is on top of your plan can send it the same day. If you feel like you have to ask, it is probably time to re-evaluate the relationship when your schedule allows.

Question 19

Am I a fiduciary for our company's health plan?

Accepted Answer

If you sponsor a health plan, you are a fiduciary under ERISA, whether anyone told you or not. You have a legal duty to run the plan in the best interest of the people on it and to pay only reasonable fees. You don't have to be perfect, but you do need a documented process for reviewing contracts, fees, and broker compensation.

Question 20

Do health benefits actually help with employee retention?

Accepted Answer

Yes, and employers underestimate it. Gallup estimates replacing one employee costs one-half to two times their annual salary, and in MetLife's research 66 percent of employees called health benefits an important driver of loyalty while only 57 percent of employers thought so. What employees value is a plan they understand, a network with their doctors, and a family contribution that does not feel like a punishment.

Question 21

Why don't our employees value the benefits we pay for?

Accepted Answer

Usually because nobody explained them. Most enrollments are a long PDF, a short meeting, and a deadline, so employees default or pick the cheapest paycheck deduction and get surprised by a bill in March. Plain language, real examples, total cost comparisons, multiple formats, including spouses, and year-round reminders fix most of it.

Question 22

What is a dollar saved on benefits actually worth to my business?

Accepted Answer

Far more than a dollar. Benefits savings go straight to the bottom line, so the revenue equivalent is the savings divided by your net margin. For a food distribution company running thin margins, every dollar saved on benefits is equivalent to about $85 in sales it no longer has to make. Add the lower renewals that follow, and the multi-year impact is substantial.

Question 23

Is an ICHRA right for my company?

Accepted Answer

An ICHRA gives each employee a tax-free allowance to buy their own individual market plan, so your cost is fixed no matter what claims do. It tends to fit smaller employers, hourly or part-time workforces, multi-state teams, and groups whose renewals have outgrown the budget. It is a weaker fit for older workforces, counties with thin individual markets, or employers who rely on a rich group plan to recruit.

Question 24

Should our city, county, or school district stay in a statewide pool like TML or TRS-ActiveCare?

Accepted Answer

Maybe, but you should know why. Pools like TML IEBP, TAC HEBP, and TRS-ActiveCare offer stability and simplicity, and they protect small entities from one bad claim. The same sharing can work against larger or healthier entities that subsidize the pool year after year. Run a fair comparison inside your procurement rules and document the decision either way.

Question 25

What benefits issues should we look at during an acquisition?

Accepted Answer

Before close, check how the target's plan is funded, any self-funded run-out or stop loss gaps, large claimants, compliance filings, buried executive or retiree promises, and broker contracts that trigger on a change of control. After close, set a target date to harmonize plans. Combining groups often creates enough size to self-fund or join a captive for the first time.

Straight answers to the questions employers ask me.