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Health Benefits and Custom-Designed Plans

employeebenefitsfolders
employeebenefitsfolders

A common conversation I have with both employers and employees sounds something like this: “Health insurance is too expensive. The coverage doesn’t fit. I want the best plan you have available, at the best price. If you don’t have it, then I am going to find a different agent or broker and keep shopping.”

Frustrated clients call me with a long long wish list. The No.1 priority is to pay less and get more coverage. They also want lower deductibles, co-pays and out-of-pocket expenses. And they don’t want to pay for coverage until they really need it. Sometimes employees point out that they’re super-healthy, so they only want the cheap, catastrophic plan and then they expect it to pay for everything. And some employees drop coverage to avoid payroll deductions, but when they suddenly need surgery, they wonder if they can sign up right away.

Do you relate? There is a gap between what most people want out of health coverage and understanding how it all comes together. There are solutions. The first step is to take a deep breath and clearly define what the various terms mean and how a practical, affordable benefits package is designed.

Employee benefits

An employee benefit plan involves more than health insurance. It’s fair to say that many employers offer some type of medical coverage, called health insurance or group medical insurance. But a comprehensive, complete employee benefits program includes: major medical; dental and vision; life and disability; an Employee Assistance Program (EAP); Flexible Spending Account (FSA); Health Reimbursement Arrangement (HRA); Dependent Care and Transportation Benefits (FSA); Health Savings Account (HSA); retirement programs (401k, 403b); and sometimes even pet insurance.

The role of a benefits advisor is to take the client wish list and convert it into a functional benefits program. To do this effectively, we must convert subjective statements and goals into precise design parameters that are used to identify and select plans from insurance carriers. This process won’t work by simply using Google to shop for health insurance.

Benefits are a design process

Most everyone is looking for the best plan at the lowest price, so start by defining “best.” Truly effective health insurance coverage is determined by looking at: where the employer is located; where the employees live; doctors, clinics, and hospitals; prescription coverage; and the relative cost of each plan option.

A company located in a major metropolitan area will have different coverage options and costs compared to one located in a rural area, complicated further by employees that live far away from the employer. These days, remote employees may live outside the state. Finding a plan that works for multiple locations becomes critical.

What’s more, it’s not always about the cost, but it is about the money. Purchasing the cheapest plan may turn out to be the most expensive plan, if enrolled members can’t use or access their benefits. In most cases, finding and packaging the various lines of coverage with standard insurance plans works well. There are other times when there’s no appropriate off-the-shelf solution for an employer.

Why custom-design the plan?

Depending on the size of the company, self-funded insurance plans can be the answer. These plans come under different flavors, such as Medical Expense Reimbursement Plans (MERP) and Level-Funded Plans, but they all require further design work and usually will require medical underwriting. This means the health and age of the enrolling member will affect the final rates. Consider the following.

Younger employees. Those in their 20s, 30s and 40s may find their rates are competitive. The flip side is that older employees and those with pre-existing conditions may boost rates, making this impractical, but the potential is there.

Older employees. Those age 65 and older, frequently don’t have the information needed to effectively deal with Medicare-eligible workers. Options will vary based on the size of the employer, but in most cases, it is worth looking into integrating Medicare-eligible coverage into the employee benefits program. This will improve coverage and access for older employees, while lowering their coverage costs. Employers will also see large potential savings. This is a competitive advantage to hire experienced employees without worrying about the usual expense of providing medical coverage.

Designing and implementing a good employee benefits program is an ongoing process. Every year there are new regulations, cost increases, provider network updates, and changing employee requirements. When employers foster a strong relationship and clear communications with employees, it is possible to design the best plan for your company and a health insurance plan that works for everyone.

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