Considering changes to your employee benefits plan can be a perplexing process. And the risk associated with making any plan modification is heightened when the supporting data are not available.
In today’s health care environment, however, plan design adjustments need to be considered far more frequently due to the pressures of managing costs.
“Providing a comprehensive benefits package is a vital component to attracting and retaining employees. Employers need to carefully consider how changes to the benefits plan design can affect their current and future workforce,” says Aaron Ochs, managing consultant at JRG Advisors. “When considering plan changes, partner with an experienced benefits professional who can utilize plan modeling to determine your best benefits strategy.”
Smart Business spoke with Ochs about how plan modeling helps employers to identify the best use of resources and to engage in experimentation without taking on risks.
What is plan modeling?
Plan modeling makes it possible to create scenarios that consider how medical claims would be paid given various plan design modifications. The analysis also identifies problem areas within the plan. With the results of the professional analysis, employers can consider the realistic solutions that are aligned with their coverage and cost objectives.
For instance, if emergency room costs were disproportionately high, an employer could consider raising the emergency room co-pay, while educating employees about 24/7 telemedicine and urgent care facilities. This would create a lower out-of-pocket cost for these more convenient options to the expensive ER visit.
Even if an employer is just thinking about making plan design adjustments because it suspects it would drive better claims results, the use of modeling can help the employer test-drive those changes before implementing them. The results of the modeling will help an employer see the outcome of suggested changes to its current benefit structure, before actual implementation.
How specifically might the plan benefit from modeling?
Plan modeling gives employers the ability to see the likely impact of plan changes beforehand.
With access to the data provided by plan modeling, employers can identify the strategies that fit the employee population coverage needs and the company goals. Employers mitigate the risk of a benefits design misstep like implementing drastic changes to popular — and necessary — benefits offerings.
With these data points, an employer can make educated, strategic decisions that balance the financial benefit with employees’ coverage and access needs. Some models even illustrate how many employees will be affected by each change, allowing employers to truly balance value and cost.
What are the popular plan changes?
Some of the more popular plan modifications include adjustments to deductibles and co-insurance, office visit versus specialist co-pay, urgent care versus emergency room co-pay, tiered rates for prescription drugs and Health Savings Account plans.
Identifying and managing even just a fraction of costs can generate significant savings year-over-year. That is because the smallest percentages of identified high-spending areas represent the most promising potential for savings. And, the more models employers run, the more likely they will find hidden ways to curb benefits costs.
In a burgeoning area where employers are trying to manage expenses, plan modeling is essential. With this approach, employers can consider changes without having to wait until after implementation to measure success.
Insights Employee Benefits is brought to you by JRG Advisors