Atlanta, GA — October 26, 2010 — SCI Companies announced today that its 2010-11 rate increase for premiums it will pay on its group health insurance provided through Humana is 1.33%. The rate increase was effective October 1, 2010.

“This rate increase is unheard of in today’s market, with most Professional Employer Organizations (PEOs) experiencing rate increases from 15% to 35% annually,” said Henry Hardin, CEO of SCI Companies.

PEOs such as SCI Companies deliver outsourced HR solutions to small companies, where the PEO takes responsibility for the client’s HR department and its functions. PEOs help small business owners and entrepreneurs minimize costs and maximize efficiencies via a complete HR outsourcing model called a “co-employment” relationship. In a “co-employment” arrangement, employees are paid directly by the PEO, who delivers a host of HR and co-employment services to employees of the client, such as administering payroll and providing employment benefits.

Under a co-employment model, the PEO takes responsibility for becoming the employer of record. Health insurance, workers’ compensation insurance and other employee benefits are covered under the PEO’s master policy, unless one or more of these risk management products are “carved out” of the contract between the two parties. The advantage of this relationship to the small business owner is potentially lower employment costs, workers’ compensation rates, unemployment rates and insurance benefit rates.

For years, many small businesses have relied on their PEO partner to provide HR outsourcing services and help them drive down the cost of health care insurance through the pooling of small businesses together. But according to Bruce Silver, a leading HR consultant who follows the PEO industry, this may no longer be the case. Some PEOs are reporting this year that they have received cost masters with across the board 35% increases from carriers such as Aetna.

The current economic conditions have small business owners looking for new ways to reduce all of their costs, particularly health and other employee benefits costs. However, with health care reform a key topic of conversation for months now under the new administration in Washington, small business owners have delayed any changes in their health insurance programs until they understood the impact of health care reform on their business.

With the overhaul of the health system and the resulting legislation passed in March 2010, small business owners now know; the largest tax credits in the bill go to very small companies (less than 10 employees) with low-wage workers. Companies with more than 50 employees get no tax credit at all.

Health insurance costs continue to rise across the board. Factors fueling cost increases include:
• Increased use of new medical technologies
• Higher prescription drug costs
• Pressure on health insurance plans and the private sector to absorb higher costs as government funding for public programs like Medicare and Medicaid decreases
• Pressure on the health system to cover the cost of the uninsured
• The rising cost of processing health insurance claims
• Profits the insurers desire to attain
• … and more

Meanwhile, in addition to normal factors and increases the industry experiences, insurance carriers have begun to announce additional increases in premiums due solely to the new legislation. These increases can range from 1 to 9% depending on the state and the filings of a particular insurance provider.

Yet, with all these factors driving costs up, the single most important issue effecting cost may still be the health of the people being insured in a particular group, and the risk that the insurance provider is willing to take on that group, based on the history of the insurance claims made by the group.

SCI Companies’ low renewal rate is a reflection of the results it has attained from a continuous focus and emphasis on its employees’ health and the programs it sponsors to encourage employee wellness. The programs that SCI management established years ago are now widespread in the industry. When companies are able to show their workers are improving their fitness and overall health, insurers are more likely to see them as less of a financial risk, thus may pass along some of the anticipated savings.

“We are proud of the emphasis we have placed on employee health and wellness programs over the years, and today’s announcement is just proof that preventative programs get results — for the individual employees and the employer,” said Greta Cairns, Director of Human Capital and Atlanta Operations for SCI Companies.

About SCI Companies

SCI Companies,, has led the industry with innovative Human Resources Outsourcing (HRO) solutions since 1985. Our focus on flexible, customer-based solutions provides a comprehensive menu of Human Resources (HR) services, consulting and outsourcing designed to offer the convenience of a single-source provider for all your HR needs. We have grown with our customers by offering an unbeatable combination of individually customized programs, leading edge technology and a service team dedicated to making you “The Employer of Choice.” Contact us today.


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