Arguably the biggest decision employers have to make this year is whether to pay or play—as in, continue to offer company-sponsored health benefits, or pay per-employee fines levied under the Patient Protection and Affordable Care Act to allow workers to purchase health insurance through public or private exchanges. During a recent session sponsored by the Midwest Business Group on Health, two employers offered insight into the thought process that led to their opposing decisions.
On one side, an Aon Hewitt executive explained why the firm will continue to offer employees insurance coverage through a corporate exchange and discussed how other employers might successfully communicate such a transition to workers. On the other, Bruce Schlesinger, executive vice president of JMB Insurance, talked about why his company will “play” in 2014.
Aon Hewitt will ‘pay,’ while expanding benefits communications
John Reschke, vice president of HR at Aon Hewitt, described the firm’s corporate exchange “lite” model, which offers four self-funded medical plan types (Platinum, Gold, Silver and Bronze, with some variation between carriers) to about 22,000 employees. Worker contributions vary by compensation level, with lower-compensated employees paying less for medical coverage. The Bronze and Silver options are consumer-driven health plans that auto-enrolled workers into health savings accounts. The Gold plan is a traditional PPO and the Platinum is an HMO-type plan.
With 21 different rating bands (as prices vary based on different regions) and with possibly five carriers in each region, Reschke said the exchange model wasn’t hard to administer once it was set up. He said “the ability to transfer the risk to insurance carriers for medical and leave the company contribution at whatever the credit was set it becomes very stable, very predictable and that was highly desirable.”
However, he noted, “it is a barrier to communicate,” as his team could no longer provide a single benefits message to all U.S. employees, and workers sometimes griped over why Gold plans in California and New York were priced differently. As Reschke explained, medical cost differentials under these types of plans varies based on geographic area just as housing and gas prices fluctuate.
The consultancy began educating employees about the corporate exchange “lite” in August 2011, much earlier than past communication campaigns, for its November open enrollment.
“The customer experience has got to be extensive [and] broad,” Reschke said. “A lot of people will not read [information provided], so you must make the attempt [to reach them],” especially if they receive coverage through a new framework or there are major changes to the plans.
Reschke said that employees took to the enrollment process easily, since most people are familiar with comparison shopping through Amazon or flight aggregators. In terms of decision support, he and his team provided decision tools and comparison charts. Employees could differentiate coverage by plan type and drill down to specifics between carriers. All the information was individualized by region and the amount of company credit was clearly displayed. The firm also provided pharmacy cost estimators, provider directories, and expense estimators to determine what their out of pocket costs might be.
“Through this one system, someone could find out everything they wanted to about the plan that they’re offered,” he said. “Extensive communication is vital in this strategy. It’s new and different for most employees and they needed a system that would have enough robustness to it and was simple enough to use to make an adequate choice.”
JMB Insurance will ‘play,’ after considering 8 questions
Small employer and broker consultant, Bruce Schlesinger, executive vice president of JMB Insurance, decided that maintaining a single-sponsored health plan is best for his workforce. Schlesinger determined this strategy after finding that his employer-sponsored plan scored Platinum based on the metal-levels of the upcoming public insurance exchanges before including the subsidy put into employees’ HSAs.
The brokerage firm plans to offer the same qualified high-deductible health plan with a $2,500 deductible and HSA for employees in 2014. However, he made aggressive design changes to the plan in the last few years due to inflation.
“The reality with plan designs that include copayments [is that] the value of increasing a deductible is diluted by the present pharmacy and physician office copay,” he said. “We make changes that interfere with the perception of benefit value and we don’t get a lot for it.” He eliminated copays from the plan three years ago and “[hasn’t] looked back.” However, he noted that his approach may not work for every organization.
Schlesinger offered employers 8 questions to consider when deciding to pay or play:
- How long are the terms and pricing guaranteed?
- Where are the hidden costs?
- Will we be able to advocate for our participants?
- What are the factors that determine cost?
- Will we have access to financial and clinical data?
- If multiple carriers or vendors are involved, how do we know that will they continue to cooperate?
- What should be keeping me up at night?
- What happens next year?
