Beer brewing and health plan implementations rarely are considered in the same sentence. But why not? Both have a series of steps to follow, pitfalls to avoid and significant effects on the economy and employment.
In 2012, 60% of covered workers were in a self-funded plan. The brewing industry consists of more than 2,500 breweries representing a $223 billion economy and 1.8 million jobs. Considering the net cost of health insurance in 2010 represented 6% of $2.6 trillion in health care expenditures, it's no secret employers are feeling the pressure. Maybe it's time to take a lesson from the nation's estimated 1 million homebrewers: I can make this product better by doing it myself. Some tips to get you started - in brewing and benefits:
Go with the grain
Ask any brewer and they'll say that the grain bill is one of the most important parts of the brewing process. More than just an ingredient list, the grain bill is the combination of base and specialty grains responsible for everything from color to body to taste to potential alcohol content. It's the core of the beer.
In a self-funded plan, the "grain bill" is the plan document - the core of the plan, identifying plan intentions and, ultimately, directing the actions of the claims administrator. A solid and clearly built plan document is key to obtaining the intended results.
Use the right equipment
Walk into a brewery, neighborhood brewpub, or any homebrewer's garage and you'll see a multitude of shiny equipment. Without the proper equipment, all you have is a pile a grain.
Similarly, a health plan's equipment is equally essential. Claims administrators, in-house staff, technology and supplemental vendors all exist to keep the plan brewing efficiently. Care needs to be taken in selecting equipment and vendors.
Also, consider whether an all-in-one vendor or carved-out vendors will work best. An all-in-one can often provide low overall costs (carrying slimmer margins through economies of scale and multiple lines of business/products), but large vendors have a difficult time customizing and maneuvering to meet the plan's specific needs. Carved-out vendors offer a wider variety of options, but ultimately require more direct management of the many contacts. Brokers may help manage vendors, but at additional cost.
Choose hops with care
Regardless of what beer you open, the aroma and taste of hops will exist to some degree. Depending on the style, a waft of citrus or grassiness may smack you in the nose or you may spend several sips swishing around your palate looking for a hint of spiciness. Hops are a great example of benefits in a self-funded plan. They can change the user's impression of the entire product. Depending on the quantity and variety, they can make or break the reaction.
Thus, self-funding employers must consider the participant base and their needs and wants. Catering to one individual can lead to a bitter taste for the rest of the group. Ignoring the group entirely by making "what's popular" can result in a lackluster product that nobody wants but is forced to use.
Allow for yeast
In 1516, Germany's beer purity law limited brewers to water, barley and hops in beer production. It wasn't until the 1800s that the discovery of microorganisms resulted in amending the law to allow for yeast - an essential (yet unknown) component.
Back through benefits history, the absence of dedicated benefits staff was commonplace, yet an informed staff is crucial with a self-funded plan. The proper strain of yeast helps control everything from the alcohol content to release of esters. The wrong yeast strain might yield off-flavors, low sugar-to-alcohol conversion or stuck fermentation. Prepare for self-funding by attending seminars and courses, reviewing vendor materials and reading benefits publications.
Focus on flavoring
Sometimes brewers work with adjuncts, fruits, and/or flavorings. Like a benefit plan, these bonus additions can add body, color and interesting aromas/tastes. For the self-funded plan, add benefits that make sense for the plan you are brewing and the employee population the plan serves. For example, an eyewear discount option doesn't offer much to participants who also subscribe to a popular supplemental vision plan, but a transplant benefit may be more valuable.
Think about the finished product
Will it be bottled or kegged? A bottle is convenient, but a keg offers more uniformity and, to many, draft just tastes fresher.
With the plan, having several carve-outs provides more options, but may confuse participants. However, a single vendor is only as good as its worst experience - one bad taste could result in a disgruntled employee on all fronts.
And labeling? Branding your product has its pluses and minuses. On the positive side, vendor and administration changes can be seamless. Still, knowing the company has full control over the plan may result in plan exception requests and resentment from negative plan decisions.
Like brewing, designing a self-funded plan has many steps and options. It's a bit overwhelming at first, yet can be tremendously rewarding and cost efficient. Each company should consider whether self-funding is a viable option and, if so, make sure it is brewed up correctly.
Shaun Snyder is a health care analyst for a major insurance carrier and specializes in administrative services-only products. He's worked in plan administration for self-funded plans for nearly 10 years, and has been a homebrewer for eight years.
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