Smart Benefits: More Employers Offering More Health Plan Choices

Smart Benefits: More Employers Offering More Health Plan Choices

Employers faced with spiraling healthcare premiums are offering employees more plan choice as a way to regain some control.

Options Optimum for Employers and Employees

Offering a choice of plans means employers can fix their share of the contribution to the lowest cost plan to help control expenses long term – a structure considered to be defined contribution. And more options can help employers attract and retain employees.

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For employees, having a choice means they can decide which plan is right for them. Rather than just having one plan that can make employees feel they are paying for benefits they don't use, adding plans that appeal to different types of employees helps workers feel empowered, boosting their satisfaction.

Law Firm Leads With Choice

One local law firm offers a choice of three plans to appeal to the different interests and needs of its employees.

• There is a low, $500 deductible plan with a higher premium that appeals to those who use services more frequently and are willing to pay more weekly to have less out-of-pocket expenses when services are used.
• They offer a Health Savings Account (HSA) plan with a $1,500 deductible for those who want a tax advantage and the opportunity to save money for future healthcare needs, even though they may not use services now. And the firm even contributes to the HSA for employees.
• The firm has a $3,000 high deductible plan with copays on certain services rather than deductibles. This plan offers a really low premium and is designed for those who don’t anticipate using higher cost services and want to spend less money on health insurance.

With the choice of three plans, employees feel the benefits decision is in their hands, increasing employee satisfaction with the firm’s benefits program. The options also offer more financial flexibility for those who need it.

Carrier Choice a Trend

The trend towards choice reflects what’s happening in the healthcare marketplace. Until recently, carriers have limited plan choice, mostly to one to two plans. However, healthcare reform has created a marketplace of individual choice through the public exchanges. Both the Rhode Island and Massachusetts exchanges offer a variety of plans for individuals to select from. And, even small businesses going through the public exchange shops are able to offer a multitude of plan choices around a defined contribution model.

However, there’s a potential downside to the exchange plans: too much choice can overwhelm individuals who are trying to make a decision on which plan to purchase. Private exchanges emerging all over the country have responded with less choice than the public exchanges, but more options than an employer typically offers – as many as six plans. But private exchanges are new and their technology-driven platforms and enrollment features are meant for computer savvy individuals. For employers not ready to take the leap to a private exchange, adding plans may be a smart choice in the meantime.

Amy Gallagher has over 21 years of healthcare industry experience guiding employers and employees. As Vice President at Cornerstone Group, she advises large employers on all aspects of healthcare reform, benefit solutions, cost-containment strategies and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, and is often quoted by national publications on the subject matter. Locally, Amy is a member of SHRM-RI, the Rhode Island Business Group on Health, and the Rhode Island Business Healthcare Advisory Council.