A 100-year-old fruit company with 600+ employees located in Central Washington
The company had a self-funded health plan that was becoming increasingly costly. Every year it went up substantially caused by large ongoing claims.
The company changed stop-loss vendors, but that didn’t make much difference. Now the company was facing a 30% increase in funding due to high claim costs. And future health plan costs down the road were only going to be higher.
Berg Benefits was brought in to evaluate the situation. They recommended a two-step approach:
- Step 1 - Purchase a fully insured plan with a high deductible that saved overall cost.
- Step 2 - Add an employer-funded HRA to subsidize the high deductible for employees.
The following year, the insurance carrier notified the company of a 15% increase for renewal. Berg Benefits stepped in to help, taking four specific actions to eventually achieve a 0% increase.
- Berg Benefits negotiated with the carrier to get the 15% increase down to 5%.
- Berg then negotiated with the carrier’s management to further reduce the increase to 2.5%. (On average, a 5% to 8% increase overall per year is considered an acceptable increase from the carrier given medical inflation.)
- It added a higher co-pay to non-network ER (rarely applies to any claims and is a low impact to employees) and was able to bring the increase down to 1.9%.
- It added $10 to employee payroll deduction.
After a two-year process, the company, which had faced a 30% increase in self-funded insurance costs, saw a 0% increase due to Berg Benefit’s industry knowledge, negotiating skills and employee involvement.
Through the new program structure that Berg Benefits established, the client continues to receive negotiated rate adjustments of 2% yearly instead of an industry average of 5% - 8% despite high claims. The company plans to continue working with Berg Benefits indefinitely, as the cost savings have been significant.
In addition to lower costs, the fruit company appreciates the consistency of health plan costs year-over-year, allowing it to better predict and plan for overhead expenses.
Finally, by working through Berg Benefits’ third party administer, RedQuote, the fruit company is relieved of the burden of administering the HRA and handling claims. That’s valuable time they can then put towards revenue-generating functions.
You’re the best insurance broker we’ve ever had!”-CFO