Plan Design Changes: Difficult Decisions to Control Costs

According to a survey recently released by Towers Watson and National Business Group, health care costs are projected to increase by 7 percent in 2011. Annual costs on a national average per employee are expected to reach $11,176 (up 7.6 percent from 2010). North Carolina health care premiums are expected to increase by an average of 10-11% per employee based on several recent surveys and current insurance carrier trend. Employers are concerned not only with these expected rising costs, but also with the effects health care reform will have on their health plans over the next several years. Many companies are implementing more comprehensive plan design changes to address these concerns, such as:

• Decreasing contributions towards dependent coverage through spousal waivers, surcharges and per-dependent contributions
• Discontinuing employer-sponsored retiree medical coverage or restructuring retiree programs
• Offering incentives or penalties to providers based on performance
• Focusing on wellness and rewarding or penalizing employees based on biometrics like weight and cholesterol

We understand that many of these plan design changes are difficult but necessary to control costs in many situations. Additionally, Progressive Benefit Solutions, has helped our clients save money through creative strategies such as:

• Health Reimbursement Arrangements with high deductible plan designs that reduce overall premium and provide comprehensive benefits to members
• QHDHP  (Qualified High Deductible Health Plans) with access to HSA accounts that provide employers and employees tax advantages over traditional health plans while also lowering overall premium
• Alternative funding arrangements that provide the employer with potential cost savings based on claim utilization.  (Feel free to reach out to me if you would like specific examples)
• Pharmacy carve out plans for self insured clients that give more control of plan design to employers.  (See Rick Kelly’s blog entry from last month)

Our next Lunch and Learn on June 30 will focus on creative plan design strategies and will be led by William Salmon.  Be on the lookout for an invitation from Michael Johnson and we hope to see you there.

Posted 04/26/2011

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