Benefit Design & Management

A good broker will partner with you and provide you with a total benefit picture. Below is a list of services that a good broker should provide.

• Insight into healthcare trends and legislative updates
• Help with understanding compliance requirements
• Help with understanding how plan designs impact premiums
• Benefit models
• Employer/employee cost sharing models
• Business processes and systems that save time
• Cost analysis model to aid in communication to upper management
• Communication techniques and plans to help market your message to employees and management
• Assistance with claims management
• Helping you plan for the future

Your broker should understand your company and provide you with the information required for you to make the best decision for your company. Many companies do not realize the cost savings that can be gained by picking the right broker. By switching insurance providers, not the plan services, HR Service Team saved one company over one million dollars in premiums in one year.

Your benefit plan is part of your Employee Value Proposition. If you market it correctly, you will see the returns. At HR Service Team, we use a three-step process.

1. Design the benefit launch strategy and communication rollout.
2. Create communication materials that are concise and well illustrated. HR Service Team engages our resident graphic designer/artist to help capitalize on the story you are telling.
3. Inform employees. HR Service Team holds round table informational sessions with employees and their significant others to help them understand the benefits they will receive and the costs that the company is paying on their behalf.

We recommend you start by reviewing your plan design. Making minor changes to your plan may reduce your premiums.

• What is the cost sharing ratio used to determine the employee costs?
• What are the Calendar Year deductibles and Out-of-Pocket maximums?
• What are your office visit co-payments?

One company HR Service Team was working with was hit with a 39% premium increase. The plan was very rich – no CY deductible and 100% coverage for hospitalization. Office co-pays were $15. We were able to reduce the premium increase from 39% to 8% by modifying the plans CY deductible, increasing the office co-pays to $20 and changing the hospitalization coverage to 80% - quite a savings.

The difference between the Calendar Year deductibles and Out-of-Pocket maximums can be very confusing for plan participants. Things to remember:

• Calendar Year (CY) Deductible is the deductible that applies to any eligible medical expenses incurred by the insured during any one calendar year. The deductible must be met before the insurance provider pays additional benefits.
• Out-of-Pocket (OOP) Maximum is the maximum amount of money the insured will pay in addition to premium payments and other payments excluded by the plan. Once that amount is reached, the plan pays 100% of the costs. It is important that you look at the plan design.
• In-Network and Out-of-Network Calendar Year deductibles and Out-of-Pocket maximums are usually separate.

The Calendar Year deductible is the first expense that a participant will pay prior to the insurance benefit applying. Many plans do not apply a CY deductible to physician office visits. The Out-of-Pocket maximum is the maximum amount of expense the participant will have to spend during a plan year before the insurance company pays 100% of the approved charges.

HR Service Team Words of Caution – Some insurance companies restrict what participant expenses will be considered an OOP expense.  It is important for the participant to understand the expenses that make up the OOP maximum.

HR Service Team Practical Example

Tim Johnson slipped on the sidewalk and ended up staying three days in the hospital. Tim had incurred no other medical expenses that plan year. His hospital bill was $3,250. What would his costs be if he had the following plan coverage?

Plan Information

Calendar Year (CY) Deductible:	$250/Participant
Out-of-Pocket Maximum (OOP)*:	$1,500/Participant
Hospitalization Coverage:	80% Insurance Company; 20% Participant
*Excludes doctor co-payments & CY Deductible

1. Tim pays the first $250 of the bill – this takes care of his CY deductible. Next, he pays 20% of the bill. Tim is responsible for 20% of the bill until his OOP maximum ($1,500) is met.
2. Tim’s portion of the $3,250 bill is $850. He has contributed $600 ($850-$250 CY Deductible) to his OOP maximum.

Unfortunately, Tim ends up back in the hospital during the same plan year. His hospital bill for this visit is $6,000.

1. Tim is responsible for $900 of the $6,000 bill.
2. He only owes $900 because he has met his $1,500 OOP maximum ($600 + $900). The insurance company pays the remaining portion of the bill.