Unlock the hidden potential within your group benefits plan by mastering the art of pooling charges. Often overlooked but incredibly impactful, these charges can dramatically influence your healthcare rates. With prescription drug costs on the rise, it is essential to optimize your pooling charges. By doing so, you can mitigate costs and elevate the value of your benefits program. Ready to take control and drive down expenses? Dive in to discover the secrets of pooling charges and learn how to turn them into your competitive advantage.  

What Are Pooling Charges? 

Pooling charges are fees that insurance carriers charge to protect plan sponsors from the high costs of catastrophic claims, and typically range from 2 – 35% of premiums or claims. These charges cover extended health care claims (typically high-cost drugs) that are over the stop-loss level and all out-of-country claims from first dollar.  

Stop-loss levels are crucial in determining pooling charges. They set the threshold for claims at which stop-loss coverage begins to pay. A higher stop-loss limit means lower program fees, but it also means higher claims are needed to reach the threshold, potentially increasing risk for the organization. 

Consider the following example with the same amount of claims, but two different stop-loss levels:  

How Do Pooling Charges Affect My Rates? 

Pooling charges directly influence both your healthcare rates. Here’s how: 

1. Percentage-Based: Pooling charges are calculated as a percentage of your premium or claims and then embedded into your healthcare rates at inception. 

1. Renewal Rate Impact: The pooling charge plays a role in calculating changes required to premiums at renewal time. Therefore, optimizing this charge can support plan sustainability through the renewal process.  

1. Carrier Differences: Each carrier has a unique pooling program and offering. Pricing is determined throughout the quoting process for your specific organization; however, this pricing is subject to updates. 

Analyzing and Optimizing Pooling Charges 

When managing the financial sustainability of your benefit plan, it is essential to work alongside your advisor to optimize the pooling program, here are some solutions you should consider:  

1. Review Stop Loss Levels: Analyze your current stop-loss levels and consider adjusting them to find a balance between claim risk and pooling program cost. 

1. Compare Carriers: Review pooling offers from the market to determine if there is an insurer that is better suited to your organizations pooling philosophy. See the case study below to understand the critical impact this can have on costs.  

1. Evaluate Drug Caps: Assess whether implementing drug caps can help reduce your pooling charges without negatively impacting your employees. Please note, this decision requires careful consideration of your corporate philosophy and the specific needs of your employees both today and in the future. 

1. Monitor and Identify Charges: Regularly monitor your pooling charges and identify how they are supporting your organization’s plan sustainability. Review pooling rates at renewal to see if any changes have been made to the charges. 

Case Study: Real-World Savings 

Consider a client who approached us seeking a second opinion due to concerns about high benefit plan rates after their most recent renewal. Upon review, Navigate identified that the group was paying a 32.5% pooling charge.

This is significantly higher than market standard and had not been reviewed by their previous consultant since the plan was implemented many years prior.

Navigate reviewed options both with the current insurer and with the market to determine the best solution for the group. Ultimately, Navigate advised the organization to switch to a carrier within Navigate’s preferred pricing network, trimming that 32.5% charge to just 5%. We also fine-tuned their stop-loss levels to ensure the balance between claim risk and plan cost remains sustainable. 

By applying our recommendations, the client saw a $108,000 reduction in pooling charges and saved $267,000 overall while continuing to provide optimal coverage.

Understanding and managing pooling charges is essential for optimizing your group benefits plan. By analyzing stop loss levels, evaluating drug caps, and comparing carriers, you can make informed decisions that reduce costs and provide the best coverage for your employees.  

Remember, a knowledgeable benefits consultant can be invaluable in navigating these complexities and ensuring you get the best rates and coverage for your organization. At Navigate Benefit Solutions, we’re here to help you every step of the way—ensuring your plan is both cost-effective and perfectly tailored to your organization’s unique needs. Reach out today to see how we can optimize your benefit plan and support your business in attracting and retaining top talent. 

Navigate Benefit Solutions: Supporting your business in attracting and retaining top talent through expertly managed group benefits.