That time comes around every year when your healthcare insurance provider is going to want to increase your premium rates. What many people in small- to medium-sized companies don’t realize is that those new high rates you’re given by your provider tend to be negotiable. Whether you’re a small business owner, a program manager or an HR team member, you can make yourself useful by lowering that increase and saving the company a few thousands of dollars. Come annual performance review time you can tell your boss exactly how much you saved!
Read your contract
First of all, read the contract you’ve signed with your insurance provider. You don’t want to go into this conversation without knowing what your company agreed to. If this seems too daunting, that’s ok. Be sure to scan through the article headers and read through those that address the following items:
- Duration of the contract.
- Whether there is an agreed upon premium increase rate. In some countries it’s common for there to be a set premium rate increase or decrease which will depend on changes in your employees’ total claim numbers.
- Whether the premium rate was frozen for two years.
- Notice of non-renewal. How far in advance you’d have to notify the provider if you decide not to renew your agreement.
Information you should have handy
When you start bargaining it’s going to be helpful for you to be aware of any changes in your workforce that could affect the negotiation. The following are some questions you’ll want to consider prior to the negotiation:
- Did the number of claims placed by your staff go up or down during the current year when compared to the last one?
- Have certain people left the workforce? Have others joined? Has that made the average age of your employees go up or down?
- Is the company planning to hire more people this year and therefore make itself a more attractive client to insurers?
- Did your company contract other types of insurances with this provider that you could leverage in this negotiation?
Your company should have access to most of this information, but consider asking your insurer for your total claim numbers over the past couple of years. If you don’t want to bring this up in case your claim number is on the upswing and you’re worried that this will make the insurance provider take notice, don’t. They’ll be the first ones to bring it up if that’s what’s happening.
Get ahead of the increase
Don’t wait for new premium rates to arrive: reach out to your provider or broker to request next year’s rates around three months in advance, or at least 1 month prior to the moment when your non-renewal notice is due. Any insurance contract you have is likely to require you to give 1 or 2 months’ notice prior to deciding you don’t want to renew your contract. Some insurance companies have the bad habit of communicating the new premium rates after that time. If you let the non-renewal notice date go by, you’ll have lost most of your leverage. Your approach should be that you want to confirm next year’s rates. If there is an increase, you need the insurance provider to share the reasons for the rate increase.
Once you reach out to them, chances are that they won’t know the new rates yet (or simply don’t want to make them public). You can give your provider some time to get back to you, but if time is dragging on and you still don’t have an answer, reach out again. If you’re comfortable with this, you may want to make it clear in a very polite manner that you’re concerned about what the increase rate will be and are willing to shop around for better options. Remember: it’s not helpful to be aggressive or rude.
If they have informed you of your new rates too late, don’t give up on negotiating! Point out that you were on top of this and asked for the new rates months in advance. Even if you forgot to reach out to them early enough you can still try using the arguments we’ve already discussed to get a better deal (the company may have plans to increase the workforce, your claim numbers may have dropped, etc.)
Once you have the rate increase, compare it to the estimated average U.S. or worldwide insurance increases for your current year and the prior year. It’s very likely that the average increases will be lower than what they are presenting you with. If that’s the case, you have another argument on your side.
Know what you’re willing to accept
Think about this a bit before you negotiate. Will you take whatever you can get or are you willing to compare service providers? If the latter sounds doable, you will want to reach out to a couple of brokers and perhaps even a couple of healthcare insurance providers directly. If you operate outside of the U.S., it is not out of the ordinary to go to providers directly, bypassing the broker. It’s fairly quick to get quotes from all of these, although keep in mind that switching providers will require a great deal of paperwork for you and all the employees!
Make your broker work for you
If you have a broker, they should be working for you. It’s technically their job to advocate for you and get you the best insurance possible. In practice this rarely seems to happen (keep in mind that their commission comes from the provider). But there’s no loss in going for it. Ask them to get you a better rate, and if you’re feeling like it, let them know that if you don’t think you’re getting a fair rate, you would like them to look for other options for you.
Last thoughts
If you’ve managed to negotiate an increase rate that you’re happy with: congratulations! If you locked in what you think is a fair increase, that’s great. If it seems like it was a hard year for the market and you had to settle for a rate that seems high to you, try asking the provider to freeze the premium rate for one year, so that come next year you won’t be facing a hike again. If that doesn’t work, ask that the following year’s increase be capped.
If your company has been with the provider for more than one or two years and the premium rate increases hadn’t been negotiated in the past, you have an extremely good shot at lowering that rate. But even if that’s not the case, there’s no reason not to negotiate the premium. Good luck!