The Power of Purchasing Coalitions:
Reducing Your Benefits Spend with Innovation
Coalitions are devised as a creative risk solution to help employers turn their fixed costs, or stop-loss, into potentially variable costs. Further, this model allows employers to reap the benefits of favorable underwriting gains. In this installation of CenterStage, Thomas Rubino, a Partner at ClearPath Benefits, has given employers further insight into what coalitions are and how they may be an innovative solution for lowering your benefits spend.
The general idea surrounding purchasing coalitions are their ability to provide employers with bulk purchasing power for the costliest fixed cost expenditures, such as stop-loss, which is also commonly referred to as reinsurance. In addition to the reduced stop-loss premiums, the client can participate in favorable underwriting gains. Provided the purchasing coalition runs well, the client’s share in the underwriting gains is based on the pro-rata share their stop-loss premiums represent within the pool. The performance will directly correlate with the savings an employer will see back in their pocket. Tom expanded on this: “At the end of the year, if the purchasing coalition is running well – which they have, historically, for the last three years – our data has shown that the coalition is returning 30 cents on every dollar that has been paid in stop-loss premiums, meaning the employer receives those dollars back.”
Bulk purchasing is an advantage rarely gifted to an employer, but joining a coalition ensures our clients will receive that power. If an employer decides to change plan designs, invest in wellness programs with incentives, and enhance the standard medical management of their plan with member advocacy; then the data shows this will control cost on the front end while improving member experience. By adding these innovative methods, a purchasing coalition’s underwriters will provide decrements, ultimately producing reduced liability for the employer.
#2. They Are a Funding Method That Reduces the Costs of Traditional Plans.
In a traditional plan, an employer’s risks are reinsured by an insurance company in exchange for fixed premiums. This is usually in the form of stop-loss premiums, which protects against catastrophic scenarios. Purchasing coalitions allow these plans to be sourced at much lower rates. Moreover, a direct point of contact with underwriters can better facilitate cost control. In short, companies have the opportunity to take advantage of significant discounts on stop-loss premiums and leverage the relationship we have with the underwriters. “Not only are you sourcing your insurance at a lower cost with the bulk purchasing power, but you’re changing your fixed costs to a variable cost based on the profitability of the pool. If the pool performs well, the underwriting gains are provided back to the employers within the purchasing coalition,” explained Tom.
#3. Clients Maintain Individuality within the Power of a Group.
Coalition members maintain the ability to create customized, individual, strategic plans for their companies’ benefits while maximizing savings through bulk purchasing power. More often than not, members are committed to leveraging cost-saving strategies and not sticking to the “status-quo” of employee benefits options. Coalitions are an alternative funding vehicle that employers should seek if they’re interested in innovation, as well as having their unused premium dollars returned.
Partner With Innovative Experts
By eliciting ClearPath’s help, you’re putting yourself in the hands of experts – whose experience rests on a solid foundation of 124 years. Wondering if a purchasing coalition is a right fit for you? Curious about how to update your benefits strategy to include this new funding method? If joining a purchasing coalition sounds like a path you’d like to journey toward, be sure to reach out to Tom Rubino for further information. You can contact him at 614.754.1762 or at firstname.lastname@example.org. Don’t wait to save on your benefits spend. Choose to be ahead of your competition with lower costs and an innovative strategy.