Do Your Employees Love or Hate Their Health Plan?
One of the most common criticisms we hear about health insurance is the rapidly deteriorating “value” employees get from high-priced insurance plans. Premiums seem to rise every year, deductibles get larger, networks get smaller, copays become unaffordable….and people just feel like they’re taking it on both ends.
Price is only one element of “value”. There are also quality standards to consider. People are increasingly frustrated that they pay so much yet have very little input/information on the quality of healthcare they are receiving. Needless to say, whether they are right or wrong, many people are seeing less and less value in their health plans.
But just how good, or bad, is your health plan anyway?
Actuarial value of your health plan is a calculation as to how “valuable” a health plan actually is to employees. Actuarial value is the percentage of total average costs that the plan will cover and not your employee.
You’ll recall that the ACA (“Obamacare”) established four metal tiers to define plans in different actuarial value categories: Bronze, Silver, Gold, and Platinum.
Bronze plans pay approximately 60% of medical costs through the plan. Silver plans cover 70%. Gold 80%, and Platinum 90%. Obviously, the more these plans “cover” or pay for, the more they typically cost in monthly premium.
Scoring your health plans can prove to be a great exercise for employers who might have a few “frustrated” employees. Couple of years ago, I recommended to one of my clients that they switch from one insurer to another, and introduce a new benefit strategy that involved the utilization of an HRA (Health Reimbursement Arrangement).
This was an unfamiliar strategy to the organization, and frankly, not all of the decision makers were on board with the change. In fact, a couple of decision makers openly opposed my strategy. One of their criticisms was, “The deductibles are higher, and there are no copays on the HSA plan”, which there cannot be until a minimum deductible is met….but that’s another topic. They believed that employees would see no value in the new plan and strategy.
This employer already had very rich benefits by almost anyone’s standards. Their previous plan had an actuarial value score of 83%, which would make it a solid “Gold” plan.
My strategy involved keeping a traditional copay plan in place, but implementing a qualified High Deductible plan but offsetting it with and HRA/HSA strategy.
It worked.
This strategy reduced the employer’s annualized premiums by more than half a million dollars, in just the first year.
The copay plan we implemented, which was similar to their previous plan, scored 87% in actuarial value. But the higher deductible plan where we also used the HRA to reduce the deductible for employees scored a 89% in actuarial value, making it a Platinum plan. There is a +/- 2% variance either way in tiering.
In the event the employees needed to utilize the HRA, that plan covered 89% of all out of pocket medical expenses incurred under that plan.
The employees loved it, and immediately saw the “value” in the plan, despite the plan design being different than what they had previously known and been covered under. We achieved better health plans and simultaneously saved the organization over $500,000!
Access Actuarial Calendar HERE! What’s your plan score?
Employers should really utilize actuarial value scoring to differentiate when someone is trying to sell them a real solution, or if they’re being sold a cheap, less valuable plan just to save money. For example, without the HRA strategy behind the High Deductible Plan we implemented, the plan itself only carried an actuarial value of 77%. It was the strategy coupled with the plan that boosted the value of that plan. So employers, beware or brokers bearing High Deductible Health Plans with no risk strategy to go with them…..chances are, you are devaluing the benefits you offer employees and setting them up for financial hardship if/when they need to utilize their plan.
For self-funded employers, we have launched a very high-performing plan called High Plains Health Plan. It is predicated on sophisticated risk management strategies, population health management strategies, and transparent vendors who administer the plan efficiently. High Plains Health Plan touts a $0 deductible for many healthcare services. $0 generic drugs. $0 non-emergent diagnostic imaging services, and a very effective specialty pharmacy strategy.
High Plains Health Plan has an actuarial value score of 91%, making it one of the most valuable plans to employees you will find. The amazing thing is, High Plains Health Plan is also lowering healthcare costs anywhere between 20% and 40% for employers. That may seem impossible, or at the very least “too good to be true”, but it’s happening.
In prospect meetings, I’m always, always asked, “Can you help us save money on our health plan?” Of course I can, no question. The real question is, “What are you willing to do to save money on your health plan?” Are you willing to consider self-insuring? Are you willing to pursue different strategies? Are you willing to go against the grain a bit, get engaged with your employees?
When you’re ready…..we’re ready. Do your organization and your employees a favor and implement a plan they love that will still save money!
