Employee contribution strategies are a hot topic with both benefits administrators and health insurance professionals.
And it's not surprising. In today’s shifting health insurance landscape, benefits administrators are contending with many new challenges. In addition to the always-challenging task of coordinating a health benefits program that works for both employees and the company, they are faced with rising healthcare costs and uncertainty prompted by the Affordable Care Act. These factors are are especially challenging for small and mid-sized companies.
To mitigate these challenges and costs, most companies evaluate their employee contribution strategy to find ways to offer similar coverage at a lower cost.
An employee contribution strategy is simply the dollar amount an employer pays towards their employees’ healthcare coverage, and how it is structured.
10 Questions to Ask about Employee Contribution Strategies
Below are ten questions to consider with your health insurance agent or broker when evaluating your employee contribution strategy.
How do we want to shift costs?
Where do we want to shift costs to?
Should we place more financial responsibility on employees?
Do we want to drive enrollment into a certain plan (such as a high-deductible health plan)?
Is it our goal to transfer risk, or to absorb it?
What are our workforce demographics (average age, gender, educational level, etc.)?
Do we have a strategy to engage employees in health and wellness... if so, what incentives are offered? Is it measurable? Is it working?
Do we know what percentage of the actual claim costs are being absorbed by plan members through co-pays, deductibles and other out of pocket costs?
Are we tied to the traditional way of offering health insurance, or open to new strategies such as a defined contribution plan?
What would be the benefits and draw backs of canceling group health insurance and offering defined contribution allowances instead?
Employee Education Key with New Contribution Strategies
Employers are adopting a new mindset about health benefits, and it’s beginning to be understood by employees. The shift is being driven by a "perfect storm" of unsustainable costs and changes brought on by the ACA. And because of these changes, many companies are moving to defined contribution models and private exchanges that focus on employee engagement and increased responsibility.
Yet for the company and employees, these are major shifts in how health benefits are structured and purchased. That’s why it’s critical to focus on employee education. Communicate with employees a strong strategic foundation to create certainty and understanding around the important issue of cost and the company's goals for offering health benefits.
What key questions are you or your clients asking about employee contribution strategies? Leave a comment below.