Health Plan Strategies for Low-Earners
Giving employees more responsibility for their health care expenses can help reduce unnecessary spending. That’s the upside – in fact, it’s the point -- of a consumerism strategy. But for low-wage earners, the stiffer cost-sharing requirements that come with a consumerism strategy can present a financial hardship, or may even result in avoidance of necessary care. We’ve all seen news stories about people in emergency medical situations opting to use Uber to get to the hospital because they fear the cost of an ambulance ride. While you can argue the pros and cons of that decision, there’s no debating that employers worry that cost concerns might cause an employee to skip a needed medication or put off seeing a doctor about a chronic condition – or experience debilitating stress over medical bills.
Last week Beth Umland’s post – the first in this three-part series -- helped put the problem in perspective by showing that average cost-sharing requirements tend to be higher in companies with a lot of low-wage employees. The issue may be most pressing in these organizations, but just about all companies have some low-wage employees. In this post, I’ll share some strategies to help ease out-of pocket medical cost pressures through plan design and access to care. Next week, we’ll write about strategies that address social determinants of health.
Plan designs to manage cost share
- Tie benefits to salary. Probably the most obvious plan design strategy to drive lower out of pocket costs for lower-paid workers is through salary-based plan features – contributions, deductibles, and out of pocket maximums. If you offer a plan that’s eligible for a Health Savings Account (HSA), you can make matching contributions based on salary – for example, 3:1 for employees earning less than $50k; 2:1 for $50-$100k; and 1:1 for those earning over $100k.
- Fill coverage gaps. Low-paid employees tend to avoid high-deductible health plans even if the premium contribution is lower than their other options. You can help make this plan an easier choice by providing accident or hospital indemnity coverage at no cost to the employee. These types of plans are allowed under the HSA rules and can go a long way to alleviate the fear of a very high deductible in situations involving expensive care.
- Make funds available as needed. There are some account vendors who will make HSA funds available “on demand” even though the funds have not yet been accrued.
- Budgeting help. When expenses do hit, administrative support can make a big difference. There are a couple of new solutions that will aggregate the member’s explanation of benefits (EOBs), pay providers the amount due, and allow plan member to pay their out of pocket expense in installments interest free.
Focused access to care
- Find a super-narrow provider network. If you were offered a medical plan with significantly lower payroll deductions, but you had to get your care from one or two well-known multi-specialty provider groups and one hospital, would you take it? This type of option has proven to be attractive to employees looking to minimize their payroll deduction.
- Make generics the only option. Another access lever is to restrict prescription drug coverage to generic drugs (or to the most restrictive formulary for brand-name drugs).
- Make sure employees know their options. Help employees understand how much they can save by choosing the most economical access points – telehealth, retail convenience care clinics, urgent care, any on-site health resources. Changing behavior is hard, so this may be a point you have to make many times, in different media.
As benefit platforms and decision-support tools become more sophisticated, it’s becoming more feasible for employers to offer employees more health plan choices for a more personalized benefits package. The additional choices might be plans with very focused networks or just different types of plan design features. We are finding that “one size does not fit all” when it comes to health care. As the rules change, there are more opportunities to drive better value for a wider range of needs. It’s a good time to assess how well your benefit designs match up to your population needs.
Don’t forget to tune in next week for part 3 in this series.