By Linda Keller
It’s all too common in today’s employee benefits programs that 20 percent of plan membership accounts for 80 percent of its costs. As a result, everyone pays – employer and employee alike – and that’s a big problem.
Fixing the imbalance in a typical health insurance program is a key reason why employers are changing their approach to plan design and offering a spectrum of health plan options. Doing so means they must sharpen their understanding of employees’ needs. That can be a complex undertaking given the diverse requirements of a multi-generational workforce. But doing it right corrects a lot of inequities – and everyone stands to benefit.
Many employers today still offer just one or two plans – for example an HMO and a PPO. That’s not a lot of choice. Plus, it means people are unnecessarily over-insured and both the employer and employee are bearing the cost.
A spectrum of plans offers a true shopping experience, designed to meet employees where they are:
- Your Millennials, for example, are young and presumably healthy and would rather have a little less taken out of their paycheck for a rich medical plan that they’re not going to use, except for preventive care. They’d rather pay a lower premium contribution and have a higher deductible.
- An older, highly compensated employee with some medical issues and a couple of kids, on the other hand, is likely to be willing to pay more for broader coverage, maintain the ability to use a provider of choice and take on some financial risk with a higher deductible.
- And then there are those who might be in that 20 percent group, who would prefer to pay more out of their paycheck for a rich plan.
What to consider before designing your spectrum of plans
A spectrum approach will offer multiple health plan options with a good mix of features, all of which reflect what employees want to access and pay for. Among the guiding considerations:
- Understanding the extent to which employees enrolled in a plan with a $20 or $25 co-pay will be comfortable switching to a higher deductible.
- Understanding utilization of current plans, actual costs and savings, if contributions are lowered.
- Putting Health Savings Accounts in place to support and reflect employees’ individual life stages and needs.
- Offering voluntary benefits to address gaps in coverage like accident insurance, hospital indemnity, critical illness coverage and individual disability insurance.
When you move to offer a greater spectrum of health plan options, it’s important to engage and communicate with employees so they understand the value and trade-offs they will experience from a better mix of health benefits that are more affordable for their life stage and needs. When employees know they have more options geared to their individual needs, it will lead to more effective utilization. And that 80/20 imbalance will be a thing of the past.
Your HUB International benefits advisor is ready to help you assess how to structure a spectrum of health plan options that will meet the diverse needs of your workforce.