The only way you can know for certain how much your benefits program is going to cost next year is if your benefits program is a Health Care Spending Account (HCSA). With an HCSA, you set the level of deposit you want for you and your employees once a year. Very simple.
If you don’t have an HCSA, then it can become a bit of a shot-in-the-dark as to how much it will cost next year.
So, let’s say you have a Traditional Group Insurance (TGI) program…The Insurance company is going to calculate your rates for the upcoming year at your Renewal time, once a year. I would plan on the renewal going up 20% every year. If your employees claim significantly less than what the Insurance company predicted the previous year, you may get away with a Renewal reduction or less of an increase. Chances of you controlling the Renewal cost increases are better if you have a Group Insurance Specialist like Sharkey Group Insurance in your corner…just saying! 🙂
Another type of TGI is Flex Benefits offered through Equitable Life…only talking Carrier-specific here because Equitable is the only Insurance company offering Flex Benefits for SmallBiz. Come on you other Insurance companies…get on board with offering a state-of-the-art Flex Benefits program! Anyways, when it comes to Renewal rating, the myFlex product is different…it renews every 2 years! Same thing as a “regular” TGI…I would still budget for a 20% increase…but, it’s every 2 years.
An Administrative Services Only (ASO) program will offer some measure of controlling costs…if you are a Solopreneur or a Husband-Wife organization, then you should have a rough idea of what your claims are going to be in the upcoming year. If you know that, then you definitely have more say on what the funding should be.
Located in Cambridge, ON Sharkey Group Insurance provides independent Employee Benefits advice & counsel for Small Businesses across Ontario.