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 Expense Reduction Analysts
16415 Addison Road, Addison Tower, Suite 410, Addison, TX, 75001, United States of America It’s already started for many food and beverage manufacturers: healthcare open-enrollment season. This year is no different than recent years in most ways: Companies with 50–500 employees are getting hit with health insurance cost increases of 6.5% to 8% a year. That’s double inflation, already affecting one of the top spends for any company.
To deal with this, many F&B manufacturers rely on their insurance brokers to negotiate with their carriers, and it usually goes something like this: Clients get a renewal from their carrier that’s a 10%–12% increase YoY. Their broker spends about eight weeks negotiating and comes back with a 5%–9% renewal, and the client signs off on that.
Healthcare insurance has become a runaway cost. A typical California employer with 200 employees pays about two million dollars a year in health insurance costs, which increases to almost $2.4 million, which increases to almost $2.6 million, $2.9 million, and so on. How can you combat these increases? Your broker may try competing insurers, but changing networks is very difficult on employees, plus it usually doesn’t result in the kind of savings that make it worth the pain.
ERA has already seen four clients this year with renewal rates of 40% or more. These increases are untenable, whether 14% or 40%. If you’re simply crossing your fingers and hoping your broker comes up with something, then you’re not putting yourself in a good position. Hope is not a strategy.
Most employers are not being presented with any kind of creative, out-of-the-box ways to fight these increases while keeping employees whole. Contrary to popular belief, however, there are things you can do to control these costs.
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CALIFORNIA LEAGUE OF FOOD PRODUCERS
2377 Gold Meadow Way. Suite 285
Gold River, CA 95670
Phone: (916) 640-8150 | Fax: (916) 640-8156
www.clfp.com
2377 Gold Meadow Way. Suite 285
Gold River, CA 95670
Phone: (916) 640-8150 | Fax: (916) 640-8156
www.clfp.com