By Tom Junge, Iowa Field Director [firstname.lastname@example.org]
Before the INEDA Healthcare Program was launched in 2021, it had been over 20 years since INEDA offered a group health insurance program. The only thing I knew about members’ health insurance plans is what was included in the Salary Compensation Survey that we conduct every other year. After visiting most of our Iowa members throughout the last six months, I would like to share six things I learned about health insurance:
1. The type of plans and the amount that members contribute are all over the board.
Some companies pay 100% of the employee plan and either 50% or 0% for the family; others pay 50% for both the employee or family; and others even pay 100% for both the employee and the family. Deductibles are also all over the board, ranging from $1,000 to $4,000. The 2021 Salary Compensation Survey shows that the average deductible is now around $3,000.
2. Even smaller dealerships (25 employees or less) are utilizing partially self-funded plans.
For example, one member has established a $5,000 deductible for employees and a $10,000 deductible plan with the insurance company and uses a third-party administrator to handle the few instances when employees exceed their $5,000 deductible. This member said that in the few years that they have been structuring their plans this way, they have saved enough in reserve to cover the difference between the $5,000 and $10,000 thresholds. Before hearing these stories over the last six months, I was under the impression that this type of plan was only used by large dealerships with well over 100 employees.
3. Members are on polar opposite ends of the spectrum when it comes to Health Savings Accounts (HSA);
they either strongly promote a high deductible plan with an HSA to employees or they don’t want to talk about this type of plan at all. For companies that support HSA plans, they say it is the only way to go. Employees, especially younger ones, save considerably on premiums and have the opportunity to build a nice reserve over time. The HSA can be used anytime—not a use it or lose it scenario like flex accounts. Other members are concerned that employees don’t have enough savings to cover a high deductible plan. I have found that in some instances that the conventional co-pay plan that they offer has a deductible very close to that of a high deductible HSA plan.
In my personal experience, I switched to a high deductible plan with an HSA a few years ago and I believe strongly in them. I was paying $5,000 a year in premiums to not even use my health insurance that much. I also had co-pays and chiropractor visits that I still paid for out-of-pocket. When I switched to the high deductible plan with an HSA, my premiums dropped by $2,400/year and the employer contributed another $1,300. I now have a reserve built up and use my savings to pay for the doctor and chiropractor office calls.
4. I didn’t know that a health insurance program could refund premiums if insurance claims were low for the year.
Only two members that I visited had such a plan, and both were getting money refunded back to them. One had a plan very close to the one offered by the INEDA Healthcare Program. Most members haven’t heard of health insurance plans like this.
5. Insurance agents are not always looking out for their clients’ best interests like they claim.
I’ve run into situations where, after INEDA Healthcare quoted a company for health insurance, their current agent counteroffered a price similar to INEDA Healthcare’s price. Why didn’t they offer this to their client before INEDA Healthcare did? Was it the convenience of renewing the policy or did one insurance company pay more commission than another? Insurance agents also often use the buzzwords “grandfathered plan.” I’m wondering if they are saying these buzzwords just to keep businesses from shopping around elsewhere and finding lower prices.
6. Finally, I discovered that some members don’t have much of a choice in health insurance due to local doctor groups or hospitals/clinics not accepting all insurance companies that are offered in the state.
The lack of competition in specific areas in Iowa is costing our members dearly. For instance, a two-store dealership in Iowa could have saved $62,00/year in premiums for a similar deductible plan with the INEDA Healthcare Program, but the local doctor group wouldn’t accept the carrier. I think members need to stand up to these few organizations. Maybe this is an issue for the local Chamber of Commerce or even state legislator to address.
Although health insurance isn’t a glamourous topic, it is a huge expense and one of the main issues that dealer members asked INEDA to research. The INEDA Healthcare Program provides members with a better, less expensive option. It is also extremely satisfying to our staff when one of our members saves money with a service that INEDA offers, like the INEDA Healthcare Program.