UnitedHealth says commercial plan costs are rising more than 11%. Here's what that means for employers

If your renewal letter hasn't shown up yet, here's a little preview of what's probably inside it.

One of the biggest health insurers in the country just told everyone what it's seeing on the cost side. And it isn't good news for anybody who signs the front of a paycheck.

What's happening

UnitedHealth says cost increases in its commercial health plans, the kind most employers buy for their people, are now running above 11%. That's not a premium quote for one company. That's the trend line underneath the plans a whole lot of businesses depend on.

UnitedHealth also pointed to something most owners have never heard of. When an insurer and a provider can't agree on what a claim is worth, the fight can go to arbitration. In some regions, those arbitration awards now add up to about 6% of medical spending.

Think about that for a second. Six cents of every medical dollar in some places is going to settle arguments about the bill. Not to care. To the argument.

I'm just a simple man, but that doesn't sound like a system getting more efficient.

Why it matters to you as an owner

When the insurer's costs go up, that bill doesn't stay with the insurer. It rolls downhill. It shows up in your renewal, and then you get to decide who eats it.

You can absorb it, which comes straight out of your margin. You can pass more of it to your employees through higher premiums, higher deductibles, or skinnier plans. Or you can do a little of both and hope nobody notices.

They notice.

An employee who sees a smaller paycheck in January after open enrollment doesn't think, "Well, commercial cost trend is running above 11%." They think, "I didn't get a raise, and somehow I'm taking home less." And some of them start looking around.

So now a cost problem is a retention problem too. Replacing a good person costs time, training, and productivity you don't get back.

The bigger point

Here's what I keep coming back to. This isn't a one-year bump. Drug costs, billing fights, provider pricing, and plain old medical inflation are baked into how this system works. You and I aren't going to fix that from the break room.

And most of the usual fixes don't really fix anything. Raising the deductible doesn't lower the cost of care. It just moves the bill from your side of the table to your employee's side. Shopping carriers every year might buy you a little breathing room, but the next renewal usually catches up.

That's treating the symptom. I'd rather look at the structure.

A different approach

What if, instead of only fighting over the health plan, you looked at how payroll itself is put together?

That's the work I do. It's a payroll-structuring strategy that's layered on top of the benefits you already have. It can increase your employees' take-home pay and reduce your payroll tax exposure as the employer.

You keep your current carrier, your broker, your payroll provider, and your plan. Nobody has to switch anything. It works for any organization with W-2 employees, from small businesses to government entities. Whether each employee benefits depends on having enough tax savings to make it work, which is true for most full-time employees.

That's what business financial freedom looks like to me. More margin, more control over costs you thought you couldn't touch, and a better shot at keeping the good people you already have.

Where it hits home

There's another side to this that I don't want to skip. When an employee takes home more each paycheck, that money doesn't just sit there. It might be the difference between carrying a credit card balance and paying it down, or between living paycheck to paycheck and finally putting a little away. Less money stress at home usually means a clearer head at work.

That's the idea behind The Freedom Ledger: healthy business finances and healthy household finances tend to move together. If you're thinking about your own household's money too, that side of the conversation lives at freedom.chrisattaway.com.

Want to see what this could look like for your team?

In a free 15-minute call, I'll ask a few questions about your workforce and current setup and tell you honestly whether a deeper look makes sense. No pressure, and nothing changes with your carrier, broker or payroll company.

Book a strategy call or call or text me at 386.346.2683.

— Chris Attaway, Chris Attaway Consulting

This article is for educational purposes only and is not tax, legal or financial advice. Results depend on each organization's situation.