Savvy health consumers Featured

10:01am EDT April 25, 2005
Researching available products and shopping around for the best price is part of being an informed consumer. It's the American way.

So why should health care benefits be any different? Health care is the single most expensive purchase a company makes each year, yet it is often left unchallenged.

CEOs need to become savvy consumers of employee benefits. If you are part of the 87 percent of businesses still waiting for renewals, now may be the time to shop around for a new broker. A knowledgeable, aggressive and innovative broker knows how to find the best deals and can make the difference between saving 25 percent or losing 25 percent on employee benefits.

Even if you've already renewed your benefits package, shopping around is worth the effort. There is no rule that says you have to wait until renewal to switch brokers.

When you're searching for a new broker, make sure to find one that is knowledgeable about consumer-driven health plans (CDHPs).

The freedom to choose

With CDHPs, your employees will spend your money as if it were their own, making better-informed, budget-conscious health care decisions. They have the freedom to make their own choices regarding their health care, choosing a la carte health services from both in-network and out-of-network practitioners.

CDHPs pair high-deductible insurance products ($1,000 to $1,500 annual deductibles) with individual spending accounts, potentially offering a significant reduction in overall health care costs. Interest in CDHPs has grown with the IRS's guidance on health reimbursement arrangements (HRAs) and health savings accounts (HSAs), which typically offer employees a year-to-year rollover for funds not spent.

A well-designed CDHP -- one that is nimbly and intelligently negotiated by a skilled health care consultant -- can deliver the best a health plan has to offer. That means health care coverage that allows for preventive health measures, as well as crisis interventions, and is comparable in cost to the existing employee health care program.

CDHP basics

To understand how such a plan can save money for you and your employees, you must understand two central concepts.

1. Employees will become better consumers.

When employees pay for health services out of their own accounts, they become more selective buyers. They'll be more apt to research the best mix of quality service and affordable price. But this means employees must have access to information on quality and price as it pertains to medical services, doctors and hospitals.

2. Plans and costs vary by carrier.

Insurance rates have always varied from company to company for similar health plans. CHDPs are no different. Different insurance companies and underwriters have their own outlook, risk-assessment indicators and program pricing structures.

In today's market, some carriers provide absolutely no savings through a CDHP, while others offer substantial savings. Each company believes or "bets" something different about future claims or market share objectives.

Work closely with your health insurance broker to actively investigate and negotiate the best alternatives for your business.

Are CDHPs right for you?

Will implementing a consumer health care plan today save you money? It depends on local insurance carriers and your previous claims experience -- both of which need to be analyzed.

Taking the time to work with your health benefits broker to investigate your options and shop for the best price can't hurt. You'll either realize that your current plan is the best fit for your company or you'll find a better plan. Either way, you win.

Eric Raymond, CLU, is founder and CEO of Corporate Synergies Group Inc., a full-service employee benefits brokerage and consulting firm in the Philadelphia region. He is a frequent guest speaker at insurance and HR conferences and serves on the board of directors of Albert Einstein Medical Center. For more information on what benefits service brokers offer, including development of CDHPs, go to www.corpsyn.com or call Corporate Synergies at (877) 4-CORPSYN (877-426-7779).