Newsroom | Affordability

Helping Employers Weather the COVID-19 Economy

The public health response to COVID-19 has caused widespread financial challenges for businesses and families, and the pace of the economic recovery is still uncertain, according to recent news reports.  

To provide some relief, Health Care Service Corporation announced this month it would apply premium credits for fully insured employers worth $240 million.

Health insurers set rates in one year based on the medical costs they expect to pay in the next year for their members, and COVID-19 threw a wrench into those forecasts.

The pandemic brought unexpected costs for COVID-19 testing and treatment. But overall health care use plunged because people delayed non-urgent medical visits and procedures as they followed guidelines to slow the spread of the virus.

Medical visits declined nearly 60% in late March and early April and didn’t return to pre-pandemic levels until September, according to Harvard University researchers and the Commonwealth Fund.

Most working-age Americans get their health care coverage through an employer-sponsored plan. If their employer is large, it’s likely to self-fund its health plan. The employer covers medical costs (aside from copays, coinsurance and deductibles) while hiring an insurer to handle administrative services like processing claims and contracting with providers. For these employers, benefit costs went down as employees cut back on health care services.   

But many other companies and their employees pay premiums to a health insurer to cover medical claims. This year, their premiums are based on anticipated costs calculated months before the first COVID-19 cases appeared in Wuhan, China.

These fully insured companies are receiving credits from HCSC’s plans toward November premiums.

“We believe taking action by providing additional support and financial relief is the right thing to do,” HCSC President and CEO Maurice Smith said in a news release announcing the credits. “Our customers trust us to be good stewards of their premium dollars and ensure they have access to affordable, high-quality care.”

HCSC has taken a series of actions to support members, customers and communities as the extraordinary situation evolved over the past eight months. The company expanded access to telehealth and suspended cost-sharing requirements for these virtual services. Cost-sharing was also waived for COVID-19 testing and treatment during the public health emergency.

The company’s plans also reduced their initial proposed 2021 rates for group, individual and family plans to help make coverage affordable as the financial impact of the pandemic continues to weigh on businesses, families and communities.

Members and group customers may also receive rebates under the Affordable Care Act when premiums exceed medical costs by a certain threshold, based on a three-year average. Rebates to HCSC plan members in individual and small-group plans totaled more than $455 million in 2020.  

The course of the pandemic — and its impact on the economy and health care needs — remains difficult to predict. HCSC is committed to working with its customers, network health care providers and community partners for the duration of the crisis.

“We’re always seeking ways to support both the physical and financial health of our members during this unprecedented public health emergency,” Smith said. 

Health Care Service Corporation, a Mutual Legal Reserve Company.