Making any sort of business investment means entering into what can be an intimidatingly complex process — and the health insurance buying process is no exception. Taking on a new health plan, or even just making changes to an existing one, involves reflection and research, trade-offs and backtracking and negotiating input from stakeholders with competing priorities, among other complications that can keep you and your team busy for months.
This series breaks the health insurance buying process down into six manageable steps. While you may have to revisit each step multiple times before making a final decision, understanding the formula for successful buying can help your organization move more efficiently toward your ultimate goals — keeping employees healthy and happy while maximizing your budget.
At this point in the buying process, you’ve identified how a new health insurance plan will help your organization and put together some general research about the insurance marketplace. During step three of the buying process, you should narrow your focus and decide on your exact health insurance requirements. In other words — what does an insurance plan need to offer for your company to say yes?
Setting Requirements for Your Health Insurance
Your health insurance requirements will come from a few sources. Some will be set for you by the government and the Affordable Care Act. For example, large employers’ plans need to meet the minimum essential coverage requirements, while any small business plan will need to cover the 10 essential benefits, including maternity care and prescription drugs.
If you surveyed your employees in step one of the buying process, you should know what they consider must-haves for your plan. Is there a maximum limit for out-of-pocket costs they’re comfortable with? Do they need a specific type of provider network for their preferred doctors? You’ll need to decide which employee priorities you can bring into your health plan without going over budget.
If you’re still unclear about what your plan needs, the following three steps will help you define your health insurance requirements.
- Identify key criteria. Review the five key factors you should consider for your health insurance plan, then balance them against each other. Monthly premiums are usually one of the first aspects of a health plan employees will look at, but is paying less per month worth it if employees will face higher out-of-pocket expenses like deductibles and copays? Consider annual maximums for out-of-pocket spending, the provider network, prescription costs and the number of plan options that will be available through an insurer, and decide which aspects of a health plan are the most vital. Use these criteria to rank different plans and prepare for possible trade-offs.
- Prioritize trade-offs. Each insurer will perform better in different areas. As you review plans, rank them based on how well they deliver value in different criteria. Once you know what kind of trade-offs you might have to make, consider surveying your employees again. Their views may change when you have real examples to show them. For example, maybe your employees said they had to have access to a certain provider network. If the plan with that network turns out to be much more expensive, though, they may be willing to reconsider.
- Evaluate your options with a broker. If you’re buying a small business health insurance plan for a business with 50 or fewer full-time equivalent employees, you can look at the SHOP Marketplace to see all the plans available in your area, with the key criteria listed for each. Working with a broker can speed up the process for requesting proposals and can offer you several quotes at the same time. They’re experts in prioritizing health benefits for companies.
Moving Forward From Requirements Building
Take some time to consider whether you’ve overlooked any details or forgotten to ask any questions for your plan before moving beyond this step. Have you read the fine print for all the available plans, and do you understand features like their coverage network and expenses? If you need assistance, an insurance broker or agent can walk you through the technical details.
If you get bogged down with managing all of the insurer and plan options, it may make sense to revisit your original discussion about why you’re buying a new plan and what problems it should solve, or at the very least touch base again with all the parties involved with this decision. You don’t want to move forward and find out that some of your stakeholders now have different health insurance requirements or ideas of what the plan should look like.
Having these conversations is time well spent — it’s better to take a little more time to research here than to rush ahead and commit to the wrong insurer. Now is when you build a strong foundation for what your plan needs and which insurers are best equipped to offer it.
This content is provided solely for informational purposes. It is not intended as and does not constitute legal advice. The information contained herein should not be relied upon or used as a substitute for consultation with legal, accounting, tax and/or other professional advisers.