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Employers are on track to see their costs per employee top $15,000 per year for health care at their next renewal(according to the Society for Human Resource Management). For CFO’s this has become a frustratingly high and unpredictable expense. For HR leaders, this has put them in the position of delivering “bad news” to their employees each year in the form of decreased coverage/increased out of pocket costs. What can be done? Why not ask for a premium holiday?

 

 

I often write about things that employers can do to controlthese costs –without shifting the liability to their employees in the form of worse coverage. Today, Let’s discuss premium holidays. This applies to those employers who choose to buy their benefits in a fully insured fashion from a major insurer. While these employers represent a minority of US employees (39%) –it is still a large group.

 

Quite simply, you can more easily negotiate a premium holiday with the underwriter who handles your account than a lower rate. If each month represents a bit more than 8% of your overall premium and you get a month or half month premium holiday it is the same as a 4-8% reduction in your rate.

 

Why is it easier? Underwriters have moreflexibility to give a premium holiday than lower your rate based upon the way that their performance is measured by your insurer.

 

Why haven’t you heard about this before? Great question.

 

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