benefits design
TRANSCRIPT
The Best Practices In Benefits Design
SEAN ZAYONAgency Owner & Lead Benefits Consultant
P: 267-422-2881E: [email protected]
The Value Of Employee Benefits
Employees consider workplace benefits their personal safety net.
Employees consider health benefits nearly as important as their salary.
Employees are more likely to take a job with better employee benefits for a slightly lesser salary.1
1The 2014 Aflac WorkForces Report was conducted in January 2014 by Research Now
Benefits Package is a Tool for Employers
Employers should consider employee benefits important tools for: Retention Productivity Cost Control
The Rising Costs of Healthcare
Medical Plans are Important – and Expensive
75% of employees rank medical benefits are the most important benefit after salary.
Healthcare-related expenditures:
• Represent 17.8% of the U.S. economy(2013) and expected to reach 47% by 2024.
• Equal three times U.S. defense spending budget (2013)
• Is greater than the amount Americans spend on food, housing and transportation combined.
Choosing the right plan is a matter of:
• Balancing premiums and benefits
• Considering all costs of coverage
Types of Plans
• HMOs• POS• PPOs• Indemnity plans (aka “Major
Medical”)
Balancing Premiums and Benefits
But to choose the right plan………You must consider all costs!
Benefits Monthly Premiums
Members Cost At Point Of Service
Richer
More Modest
Higher
Higher
Lower
Lower
Three Main Cost Categories
Immediate employer costs (PREMIUMS)
Longer-term employer costs(COSTS AT FUTURE RENEWALS)
Employee costs (DEDUCTIBLES, OUT-OF-POCKET)
Copays, Deductibles and Coinsurance Maximums
Copay BucketYou never fill the copay bucket as they continue throughout the plan year.
Deductible BucketAfter annual deductible is paid, the deductible bucket is full
Coinsurance Max bucketsAfter the deductible is paid, the insurance company begins cost sharing with employees at the coinsurance level until the maximum is met. When the coinsurance max is met, the bucket is full.
Drafting the Benefits Plan Structure, Funding Options and Design
Contributions
The basis of cost-sharing with employeesCommon structures include:• Employer pays 100% for employee-only coverage, employee
must contribute for dependent coverage.• Employers and employees share the costs for both
employee-only and dependent coverage.Can be structured according to employee
classificationSubject to non-discrimination rules
Plan Offerings
Important guidelines:Keep offerings to two or three plans
maximum, preferably with a “base plan/buy up” approach
Do not offer plans more than two benefit levels apart
Controlling Costs Over Time
Relationship Between Premium and Claims
20% of the population drives 80% of the healthcare claims
Pools spread risk among many rather than just a fewPremium dollars are polled to help pay large claimsEvery group may not have a large claim every year,
but every year groups have large claimsHealthier population = lower healthcare costs =
lower premiums
Strategies to Help Control Costs
Consider higher cost-sharing with employeesMaximize network discounts with an extensive
provider networkEncourage generic substitution and use of home
deliveryConsider use of TeleMedicine services and
Supplemental Insurance (i.e. Aflac)Educate employees on wise plan useEncourage preventive careConsider use of Wellness Programs
Reduce Exposure with a Higher Deductible Plan
Higher deductibles
• Employees still have the benefit of copays from doctor visits and prescriptions
• Preventive care covered at 100%
• Lowers premium costs
Adding Supplemental Insurance (i.e. Aflac)
• Helps employees with out-of-pocket expenses like copays and deductibles pertaining to accidents or illnesses.
Adding TeleMedicine Services
• Phone a doctor – Saves time and money.
• Discount Dental, Vision, Prescriptions, vitamins
Make it a Package
Dental Plans
Often considered an important part of a benefits package
Very popular with employees
Can be offered as a voluntary benefit
Benefit plan options:
DHMO
PPO
Plan Limits
Disability Plans Disability coverage protects both ministry assets – your people –
and your employees financial security
One in three employees will be disabled before retirement
The vast majority of disability claims arise from common conditions like cardiovascular disease, arthritis, back pain, cancer, pregnancy or joint issues
Shot and Long-term disability plans have benefits that coordinate to provide maximum protection throughout a disability
Can be offered as a voluntary benefit.
Can help lower the cost of worker compensation by covering off the job injuries and keeping employees from filing false claims
Supplemental Insurance May be offered as a voluntary
benefit
Policies include:
• Accident
• Hospital Confinement Indemnity
• Cancer/Specified-Disease
• Critical Illness (Specified Health Event)
• Vision
• TeleMedicine
Other Benefits
Life Insurance
Annuities
Retirement Plans
401(k), 403(b)
College Planning
Stock Options
QUESTIONS