How many health plans should I offer?
The answer to this question will depend on how you approach your company benefits plan and the size of your organization. Some employers elect to offer a single option in an effort to keep things simple; a larger employer is more likely to offer several plan designs leaving the choice up to the employee. And startups – well, they like to mimic big companies right off the bat.
Each plan year, the main decision makers have to start with a keen focus on cost factors, and they can easily get consumed with the stress of going through the typical renewal process. However, it is important to pause and remember why you’re offering a health plan in the first place. It’s fair to say group health plans have gone from a luxury to minimum expectation for many employers. For that reason, little thought is sometimes given to the overall purpose behind the product. It’s not just about recruiting and retaining employees or just staying compliant, it’s more about increasing production, profitability, and innovation. Providing your staff with the right health plan creates a peace of mind and a sense of worth that, in turn, allows a workforce to thrive. On a side note, if executed properly, there is an opportunity to improve your options based on how your employees view and buy insurance.
If the main goal is to put an employee’s mind at ease, the question remains: what are they worried about?
It’s clear based on the MetLife Employee Benefits Survey that the majority of employees are concerned about having enough money to pay for disability events and covering Deductible and Copay expenses not covered by their Medical Plan. With a multi-generational workforce, one solution won’t be right for every employee. Meeting your workforce (wherever their personal needs are) can be done through a balance of simplicity and well-thought out multi-plan offerings.
Our favorite option is based around a 3 plan offering, where our employer clients are committed to not only to focusing their intent on the cheapest option, but instead focusing their contribution towards the middle of the road offering and allowing for a cheaper HDHP/HSA plan that includes a Cash Funding into the Health Savings Account for the employees. These type of offerings fit several objectives and meet their workforce in meaningful ways.
Another crucial component of considering offering several plan designs is education. If an employee doesn’t fully understand the differences among what is available, then giving them options can be pointless. I always like to mention that in a catastrophic event, all health plans will have you reach their out of pocket limit. Therefore, I suggest you ask yourself how much risk are you willing to take on, and how much are you willing to pay for that transfer of risk? Most companies and employees I speak with are somewhere in the middle; they’re thinking of a serious health event, but would also like to limit their cost in case they need to see a doctor for a simple consultation or procedure. In this situation, offering two health plans would be sufficient: A higher deductible plan for those planning on the worst case scenario, and a plan with a slightly lower deductible with a $20 or $30 dollar copay to see a doctor.
Whether you’re planning on keeping it simple or offering your employees a buffet of plans, make sure you present it properly. If your employees see the lack of thought process it took to elect a health plan, or if they feel overwhelmed by too many options in front of them, the end result won’t have a meaningful impact. Not only will you lose an opportunity to increase employee loyalty, but possibly even lose out on making an impact on production and innovation.
My suggestion remains the same: always remember the why.
About the author: Angel joined the AG team in 2016 after partnering with us on several projects for mutual clients over the course of the last decade. Now he brings his charisma, his big brain and his desire to make a positive impact to our collective team of industry leading consultants. Oh, and he is already a published author with the University of Texas Press before he ever picked up a pen for our humble AG Blog.
About AG Insurance: AG Insurance (www.agiainc.com) helps employers and their employees with solutions focused on positive organizational impact and improved employee experiences.