medical gap plans - reduce health plan costs

voluntarybenefitprograms.com

Medical Gap Strategy

Creative Health Plans Cost Reduction


Executive Summary: Medical Gap Plan

Allows employers to reduce group health plan costs 10% to 20%

This also helps people guard against large out-of-pocket medical expenses. 1)Reduce plan costs 2)Improve benefits


Health Plan Costs =

Big Problem


Worker premium share

up 159% in 10 years...

...Not Sustainable!


Growing need for Supplemental Medical insurance

A 2007 study* found that the majority of personal bankruptcies are due to medical expenses, even for those with healthcare coverage.

36% of adult Americans have no savings earmarked for emergencies, according to the Consumer Federation of America.

76% of Americans are living paycheck-to-paycheck, according to CNN Money.

*Medical Bankruptcy in the United States, American Journal of Medicine, 2007

Employees Need Protection


Addressing Needs

There is increased interest in supplemental medical and hospital indemnity products at the workplace, as employers continue efforts to control health plan costs.

The benefit may be offered employer-paid, or employee-funded (voluntary), or a combination of the two.

Coverage is offered on a guarantee issue basis with no medical underwriting needed. Dependent coverage is available.


A 2011 survey indicated that more than 50% of employees say they are concerned about costs NOT covered by medical insurance*.

*Met Life study of employee benefit trends 2011

Addressing Concerns


Over a third of employees say that supplemental benefits are a reason to stay with or join an employer*

*Met Life study of employee benefit trends 2013

Satisfying Employees


Main Points

Gap plan Savings Opportunity:

Create savings from health plan changes

Gross savings can be 15% to 30%

(by moving to largest out of pocket options)


———Supplemental Medical Expense(Gap Plan):

• Provides employer solution TO SAVE MONEY $$$

• Enables people to fill medical gaps...protects finances

• Gives brokers a creative solution to reduce costs


The Gap Medical Strategy uses an employer sponsored supplemental insurance plan paired with a high deductible health plan.

Instead of giving the medical carrier 100% of premium... Give the medical carrier 75% and gap carrier the balance This can reduce the overall cost of group medical...


Fill in plan changes with an insured medical gap plan

(so employees are not hurt by plan changes)

Employers will pay for this if the numbers work

Next


Sample Out Patient Benefits Pays a first dollar benefit for outpatient

expenses incurred up to plan maximum Examples of expenses covered: Surgery in a facility or a doctor’s office Emergency Room – Accident or Sickness X-ray, Lab, Diagnostic Testing, MRI Outpatient Radiation/Chemotherapy Specialist Visits Physical Therapy, Chiropractic, Rehab


Sample In-Patient Benefits

Pays a first dollar benefit for inpatient out of pocket expenses incurred up to the plan maximum

Examples of covered expenses:

In-Patient Surgeries and Hospital charges

Physician In-Hospital charges

X-ray, Lab, Diagnostic Testing, MRI’s


Example - Employer advantage Renewal Plan:

$500 Deductible

80/20 Coinsurance

$3,000 Out of pocket max

#of lives Mo. Cost

EE only 30 $675

EE + SP 7 $1,350

EE + Ch 5 $1,170

Family 8 $1,890

Monthly Premium $50,670

Proposed Plan:

$2,500 Deductible

80/20 Coinsurance

$5,000 Out of pocket max

#of lives Mo. Cost

EE only 30 $450

EE + SP 7 $900

EE + Ch 5 $810

Family 8 $1,350

Monthly Premium $34,650

Total Savings: $16,020 monthly! ($192,240 annually)


Gap Insurance Claim Example

The following is an example of how our Gap plan works. The example is based on a $2,500 deductible medical plan, with 20% coinsurance, and a maximum out-of-pocket limit of $5,000.

The example is an in-network hospitalization claim for a covered surgery, with an in-patient plan benefit of $5,000.


$15,000 Hospital & Surgery Claim (Employee advantage)

Without GAP With GAP

In-Patient Benefit In-Patient Benefit

Deductible: $2,500 Deductible: $2,500

Co-Insurance (20%): $2,500 Co-Insurance (20%): $2,500

Max Out-of-Pocket: $5,000 Max Out-of-Pocket: $5,000

In-Patient Gap Benefit: $0 In-Patient Gap Benefit: $5,000

Insured’s Out-of-Pocket:$5,000 Insured’s Out-of-Pocket: $0


The Supplemental Medical Expense plan (Gap plan) is an insurance product which reimburses certain out-of-pocket medical expenses to protect employees.

It is paired with a lower cost major medical plan, and works most effectively with high-deductible plans. The combination allows the employer to find savings and keep employees whole.

Coverage offered on a guarantee issue basis with no medical underwriting. Dependents are covered as well.

Medical Gap Coverage


Gap premium NOT counted for Cadillac tax This reduces any potential penalty - (IF properly structured)

The initial annual threshold amounts for the tax are: –$10,200 for self-only coverage –$27,500 for coverage other than self-only Family limit example with 8% premium growth: 2016 $27,210 2017 $29,387 (maximum ceiling of $27,500 exceeded) 2018 $31,737 (over the limit by $4,237) $4,237 of “compensation” subject to 40% excise tax. Total tax paid: $1,695...per family!

Bonus for Forward Thinkers


Safe for Employer

Saves

Premium

ACA

Compliant

HRA

Replacement

May

Reduce Cadillac Tax

Insured Plans or

Self Insured


Make us your resource for gap plans

We help you bring clients in a new programs:

We deliver tangible savings

We help you bring innovative solutions

We help you cross sell additional benefits


Next…

We are a Managing General Agency for the top Medical Gap programs, providing analysis and turnkey solutions with pricing & benefits.

Add us to your team & let us help you with win - win

Gap plans DO NOT require waiting for an annual medical renewal.


Why…

The trend for health plan costs is up.

Our cost savings solutions for groups help you win

We provide you with the top carrier comparisons & U/W

We also help you plan enrollment & communication

Don’t rely on single carrier solutions and risk your business….


Service…

We do the heavy lifting:

We put the programs together

Provide options & value added programs

Create an enrollment strategy

Carrier comparisons


We bring you new ideas that most group brokers are not using

We Seamlessly become part of your team and and work behind the scenes on your behalf.

Your Turnkey Solution...

*Next step: Contact us for a strategy call

Contact:

Peter Toth

[email protected]

www.VoluntaryBenefitPrograms.com

1-800-579-7731

medical gap plans - reduce health plan costs

Health & Medicine

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