Out With the Old, In With the New!
Employee Benefit Trends
Anyone who has been involved in an employee benefits renewal process is familiar with the old tricks. A little increase here, a little decrease there… and viola!... a number we almost can afford. Employers and employees have played this game tirelessly for the last handful of decades. The reality is we’ve about exhausted our “cost-shifting” opportunities. With the combination of the ACA limitations and healthcare costs continuing to outpace average wage increases, there’s nowhere to send the risk.
Over the last decade, employers have aggressively explored other ways to control their rising healthcare costs. Many small to mid-size employers, have switched to level-funded or partially self-funded plans. The opportunity for tax savings, flexibility in plan design and transparency are too appetizing to not take the risk.
Eligibility management programs, by way of dependent audits and spousal disincentives, have been implemented, or at least considered, by nearly all employers. Shaving dependent lives off the health plan has been a way to reduce employer premium subsidies (fully insured) or claims exposure (ASO).
Even employers who originally dismissed high-deductible health plans and/or health savings accounts have implemented them as a cost control method regardless of the communication and education challenges.
Despite the fact that all of these cost containment strategies have been deployed, employers are still seeing annual increases on average between 6 and 10 percent. What’s left for employers to do?
Although some “new” cost control concepts are mere tweaks of old ones, there are a number of innovative ideas that are being explored, implemented and tested.
Reference-based pricing arrangements are evolving inside both fully insured and self-funded programs. Health plans are putting a maximum allowance on certain procedures and covering only up to that amount. Some plans are offering shared savings with members if they choose a provider that charges less than the maximum allowance.
Carriers and networks have developed three and four tiered network arrangements. Even beyond choosing which network plan you want at the time of enrollment, some plans allow for the decision to be made inside the health plan at the time of treatment. Driving utilization to the narrow or ultra-narrow network providers through plan design is maximizing the discount potential.
Beyond these concepts, the industry is evolving. It’ll be a matter of time before we’ll understand the financial impact of this new wave of ideas. One thing is certain, as the need for cost control persists, ideas and strategies will evolve.
Questions on the new trends in employee benefits or cost containment strategies? The ‘A’ Team has answers.
- Becoming a Better Healthcare Consumer
- Assurance Calculator: Total Cost of Employee Benefits
- The Largest Healthcare Cost Drivers
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