How claims data increases participation in voluntary benefit plans
Another open enrollment season is in the books. It's time to sit back, relax and…start planning for next year.
It is never too soon to start thinking about crafting a valuable and cost-effective plan that makes sense for your clients and their employees. So what should your clients offer or add? What will encourage employees to participate and maximize enrollment?
It all starts with identifying what makes up a "good" plan, and determining exactly what it should deliver.
How do you soften the blow?
As costs increase and renewal rates for employee health plans continue to rise, employers have three options: eat the cost, pass it on to employees, or design a plan with elements that can offset the additional spend for employees.
Considering most companies' tight bottom lines, option number one is often a non-starter. So, employers looking to mitigate the financial impact for employees may choose to keep the employee contribution level, but raise the deductible; however, that too can be cumbersome for employees, as a high deductible can easily be reached with one slip and fall or overnight hospital stay, let alone a critical illness diagnosis.
The average cost of a hospital stay is more than $11,000, while a single overnight admission can average upwards of $2,500 or more. In these scenarios, the deductible will more than likely be met, meaning employees will need to make a large, out-of-pocket payment. That is, if they have it.
Health care savings accounts, which allow employees to save pre-tax dollars (with or without employer contributions) are an option; but another, widely accepted strategy is to add voluntary benefit plans such as accident and hospital indemnity insurance.
The end goal is to help your clients put a plan in place with tools that will help ensure that employees don't get caught in a financial bind. It is possible to craft an intelligent, thoughtful plan that helps employees who surely do not have unlimited funds. It's just a matter of deciding what is best for the workforce.
Leveraging claims data
Socializing health care plans and voluntary benefits together is a smart way to do this, as opposed to presenting the offerings separately and making voluntary benefits appear to be an afterthought.
Moreover, a program based on claims experience that is beneficial to employees and tailored for them is most likely to gain traction. How do you do this? Help your clients meet employees where they are, so the plan offered truly makes sense. Consider demographics and income levels. What does the employee base look like?
With a high population of millennials, workers predominantly in their 30s, accident may be a great offering, while, statistically speaking, critical illness would likely be more beneficial to boomers and Gen X.
By using advanced technology, data and analytics, it becomes much more feasible to look at leading causes of high-frequency and high-cost claims and consider plans that address them. In the end, employees are only going to buy something they can imagine using, so your clients need to make strategic decisions about what to offer, even when they are not paying for it. Then they need to be thoughtful and thorough in communicating the benefit of choosing the plan.
By using data to help you craft a plan that is statistically designed to benefit the workforce, you are doing what is the best interest of your clients and their employees.
This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. Please consult an independent legal or financial advisor for specific advice about your individual situation.