Employer-owned health care insurance coverage is a fast-growing trend, even among smaller companies, in an effort to recruit and retain workers.
Kenneth Mazzie, senior executive consultant for McConkey Insurance & Benefits, who specializes in employee benefits, said changing to a self-insured model can lower premium costs to both the employer and employees while offering benefits that best suit the population.
Mazzie said companies have been buying coverage from carriers for a monthly premium for a 12-month contract, but once that contract is up, many face 20% to 50% increases in price the next year.
“When you convert to a self-funded plan, you can get data that helps you design a plan that works,” he said. “Companies can offer benefits that better fit their employees because it is their own plan.”
He explained that when buying plans on the open market, companies can choose from a set list of options. Those options often come at a set price.
“When you are self-funded, you can design your own plan,” he said, including offering telehealth benefits that can include mental health coverage, which is in high demand.
To convert to a self-insured model, Mazzie said companies work with a qualified team of benefit managers, actuaries and accountants to project the costs. They buy insurance above a certain threshold to insure against a catastrophic loss, but even so, the overall cost to the company and its employees is most often less.
“It works extremely well,” he said.
Companies start by collecting data like how many employees suffer from such things as diabetes or obesity or hypertension. With that data, the company can determine the best way to help employees manage or reduce their morbidity, thus reducing claims costs, he said.
“When you are self-funded, employees have skin in the game and do better as a group (at managing their health), which reduces the cost of insurance,” he said.
Mazzie said he worked with a group that received a negative 4% price for insurance through self-funding. “That delivered a message that you helped us get that because you took control of your care,” he said. “Less claims equal a decrease in costs.”
Employees, he added, don’t have to worry about personal information because data a company receives only identifies percentages of people who are treated for a specific disease. “It will tell the employer the percentage of people who comply with doctors’ orders and take medications prescribed,” he said.
With that information, employers can communicate to their staff about the need to take care of their health, he said, adding it relates to employees that it’s not just the cost of insurance, but their well-being that matters.
Many do that by incorporating employee assisted programs that meet their needs.
Along with self-insurance, companies are also offering more telehealth visits. “This is a big trend,” he said. When analyzing the cost of an emergency room visit, an urgent care visit and a virtual visit, employers can see the benefit of offering telehealth at a reduced cost.
Even when doctors charge for a telehealth visit, an employer can opt to pick up part of that cost, encouraging employees to use it, he said.
Telehealth can also be used for employee assistance programs such as mental health, which Mazzi said has been in high demand since the pandemic. “Employees are looking for this,” he said.
“When the opportunity is there, why not take advantage of it instead of taking off work, taking kids out of school, going to the doctor’s office and waiting,” he said. After seeing the doctor and running for a prescription, the cost can be high.
“When you see the doctor online, he can diagnose what’s going on, call in a prescription and the cost is probably around $15,” he said by way of example.
The bottom line, he said, is health care costs are going up. “During the pandemic, the costs were down because no one was going to the doctor. Now, the consumer price index is going up and it’s expensive. I don’t think the trend will stop for a while.”
Mazzi noted that health care isn’t the only thing going up, citing utilities, food, and the like. He encouraged people to shop around for medical services they might need.
“Look around your community,” he said. “The duplication or quadruplication of services are there and they all have to be supported.”
With a little research, he said, “you can see who’s charging what. You will see that costs vary.”
“People put more research into what large screen TV they are going to buy for the big game than they do to understand their insurance benefits,” he said. “We all need to take ownership. Proper planning prevents poor performance.”
Employers and employees alike should have a game plan, Mazzie said. “That will allow for services at reduced costs without reducing quality.”