Trakk Industries Corp. decided to interview several brokers after receiving a 27% rate increase for their Group Health Insurance. Trakk Industries Corp. is a 224 person manufacturer of high-end surveillance equipment with locations in six different states. After our initial meeting with the firm, we were granted a 'Letter of Authorization', which allowed us to obtain experience and plan design history from their current Provider.
Based on our analysis, we observed that 80% of their large claims being incurred by approximately 20% of their population. We requested a claim report that showed the number of participants that incurred up to and over $1,500 in claims. Based on two years of data, we were able to demonstrate that if the employer offered a Healthcare Reimbursement Account (HRA), the account would likely eliminate the 27% increase and actually experience a 1% reduction in rates:
A. Current Premiums: $2,078,881
B. Renewal Premiums: $2,640,178 (27% Increase)
C. Premiums with $1500 Deductible: $1,865,811
D. HRA Liability: $1,500 x 152 Singles = $228,000 | $3,000 x 71 Families = $213,000 = $441,000 (Worst Case)
E. Expected Liability: $178,000 (Expected)
F. C + E $2,043,811 (-1% Renewal )
The savings that the account received by offering a $1,500 Deductible Plan (applicable to In-patient Admissions; Out-Patient Surgeries; and Advanced Diagnostic Testing) along with an HRA plan negated the increase and landed us the account.