A brighter light is being cast on level-funded group health plans as benefits decision-makers tackle open-enrollment season. Several industry observers say the trend is more pronounced given that the Affordable Care Act remains largely intact — for now.
There has been an ebb and flow to these self-insured underwritten plans over the past 18 months, says Michael Levin, CEO and co-founder of the healthcare data services firm Vericred. But with a fixed monthly rate for more predictability, he says they can drive 25% to 35% savings relative to fully-insured ACA plans that must comply with the medical loss ratio for a certain segment of the market.
Level funding typically leverages an aggregate and/or specific stop-loss product to cap exposure to catastrophic claims. These plans are offered by an independent third-party administrator or health insurance carrier through an administrative-services-only contract.
It’s best suited for companies with a very low risk profile comprised of young or healthy populations, according to Levin. And with low attachment, stop-loss coverage in most states, he explains that the plans have “very little downside risk from the group’s perspective.” Two exceptions are California and New York whose constraints on the stop-loss attachment point “essentially preclude level-funded plans from being offered” there, he adds.
The arrangement is trickling down market. “We’ve heard from carriers that will go down to seven employees, plus dependents, while others cut it off at 20 or 25,” he says.
David Reid, CEO of EaseCentral, sees a “resurgence of level funding” across more than 38,000 employers with less than 500 lives that his SaaS platform targets through about 6,000 health insurance brokers and 1,000 agencies. His average group is about 30 employees.
He’s also seeing more customers using individual-market plans rather than group coverage through Hixme’s digital healthcare benefits consulting platform. Under this approach, health plans are bundled with other specific types of insurance and financing as a line of credit to fill coverage gaps. Employer contributions are earmarked for individual-market plans, which are purchased through payroll deduction.
Embracing digital tools
Other noteworthy developments that are expected to shape the 2018 enrollment period and beyond include the use of data-driven methods to differentiate carriers and plans for group clients, as well as transparency and decision-support tools when making plan recommendations.
“Brokers need to be availing themselves of one or more of the many digital tools that are now available to help them be more efficient and drive value to their clients,” Levin says. One promising application is in determining whether or not certain drugs are covered, because he says the difference in coverage between plans can be quite dramatic. He adds that a decision-support component can be layered on to examine benefits utilization and design the right plan.
Brokers and advisers undoubtedly walk a fine line between overloading the employee populations they serve with too many materials and skimping on important details. “Less is not more,” Reid says. “Employees want information, and the more the better.”
That means providing across multiple communication platforms detailed plan summaries and comparisons; flyers that explain various savings vehicles, how benefits work and why it’s worth enrolling in each plan, as well as a link to provider directories.
“Mobile is king now,” he says.
Embracing mobile apps and other technology will continue to be critical, since millennials will represent about 75% of the workforce in five years, according to Reid, who sees a need even among the small businesses he serves.
Peter Marcia, CEO of YouDecide, says his voluntary benefits outsourcing firm uses technology to track the fall-off rate for how long online materials are read “page by page, application by application, device by device and product by product.” The information then can be used to simplify the enrollment process and tweak messaging to accomplish corporate objectives.
Checking the accuracy of all enrollment materials is another critically important element. Reid says mistakes can be overlooked and prove to be costly, especially given the growing number of benefit plan choices and greater financial responsibility employees are shouldering. Apart from spelling or grammar errors, he says a simple typo could add an extra ‘0’ to the per-paycheck cost of a certain benefit.
Communication, of course, needs to be meaningful enough that employees have a clear understanding of their choices, which can lead to wise decisions and greater appreciation of their benefit. “Much of what open enrollment involves is educating end users on the value of their programs, especially voluntary, and how it aligns with their core” coverages, Marcia says. Those efforts oftentimes involve a careful review of materials with dependents.
He also suggests keeping a running list of any pain points from this year’s cycle to help map a strategy for accomplishing goals the following year. Lastly, Marcia believes it’s important to determine whether communications started early enough and an employer client can benefit from additional pre-enrollment materials in the future.
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