As a decision maker, the philosophy that you form for employee benefits will have a huge impact on your company and employees. There are many different approaches and benefit philosophy’s can also change over time, so they are not set in stone.
Co Pay Approach
A common approach is to offer benefits that are going to be utilized and appreciated the most. We will usually design a health plan with a high deductible, but have co pays on prescriptions and office visits. The view here, is I am going to cover the small claims but if a member has a large claim they are responsible for the larger upfront amount. This philosophy does work well because the cost is lower, but the employees get 1st dollar benefits.
Consumer Driven approach
You want your employees to be engaged in their health care. This approach will force the insured to look at the cost of care and become a consumer. Ask how much a procedure costs, shop out diagnostic services for the best deal. Research their health conditions and price shop prescriptions. There is a couple of different plan designs that can be used. The first one is Health Savings Account (H.S.A), this is where all the claims go towards the deductible. Some employers will offer incentives for their employees by funding the employee’s custodial account they use for claims. Once the money is given to the employee, this does lead to different behavior on medical services.
Multi Plan Approach
An employer will offer multiple plan selections and the employee will have to choose the best plan for their situation. With employees being in different stages of life, you may have young single employees choose a very high deductible plan, while other employees may choose plans specifically for a family planning. There may be employees that have up and coming treatments that will be very engaged in the process.
This scenario ties in with the multi plan approach. This is when the company will pay a set amount towards the premium and then allow the employee to either buy up or down in the benefit structure. Companies will use this approach to control costs, but still allow the employees to have choice.
High Benefit Offering
In certain industries, we see where a company wants to offer and pay the majority of a rich benefit plan. There are a few reasons for this. One is employee retention. The company does not want to lose any employee over benefits. Another might be, the company needs the tax deduction. This does happen! The most common is the employees are making the company extremely successful and leadership wants to take care of them. There are a lot of different options employers will use when it comes to plan designs. One of the most popular is to offer H.S.A. plans and then fully fund the H.S.A. Other options are to offer a platinum policy design, with a very lower out of pocket max. Along with health insurance, the company will offer disability, life, & vision.
Low Benefit Offering
Some companies that are being forced to offer group health, will go with the lowest costing plan on the market. The company may not have the resources to offer anything else. Common to see $6,500 upfront deductible plans. In other cases, a minimum essential coverage will be offered. These plans meet the requirements of the ACA but act more like supplemental plans. These plans will hurt employees and any company should know that going into it.
This is where a company wants to build a culture of wellness and healthy lifestyles. This approach does not always lead to savings, but there is value. Having employees engaging in healthy lifestyles can help to bring employees together. This approach will have a high deductible health plan, but will offer multiple tools for health and wellness. Employees having the ability to take health risk assessments and truly be engaged in the companies’ philosophy. We even see where gym memberships can have some reimbursements.
As you view think about the options, remember your philosophy is not set in stone. You have that approach for one year and really you are not even bound to that. Creating a benefits philosophy is just another step in leadership.