As group health insurance clients pass along cost increases in the form of higher premiums, more and more of their employees get priced out of having health coverage. This in turn lowers participation levels and ultimately raises health premiums for everyone else left on the plan.
Over time this process can lead a group to become out of compliance with minimum carrier participation guidelines and could ultimately lose the ability to offering health coverage to any of their employees.
What can you do to change this participation death spiral? Here is what I did for a client:
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Client background – Group of roughly 150 employees with office versus warehouse personnel roughly 58 percent /42 percent split respectively. Two health plans offered with employer contribution of 50 percent for all levels of health coverage for the low plan with the same amount of contribution paid toward the high plan. Participation in health plan roughly 42 percent (50 percent after spousal waivers were deducted). No other health carriers would quote it b/c it didn't meet minimum participation requirements. If inforce health carrier would have conducted audit they could have terminated group health plan.
Step One – employee survey: Working with the client I had them conduct a survey of the warehouse employees that waived health coverage as to why they were doing so. Did they have individual coverage elsewhere? Could they not afford the roughly $125/month in single coverage premiums? I broke out affordability levels into the categories below and asked them to denote the highest range they could afford to pay per month for health coverage.
- $0-$25
- $26-$50
- $51-$75
- $76-$100
The results of the survey concluded that most did not have any health coverage at all but wanted it. They could afford to pay anywhere in the $0 to $50 range.
Step Two – Divide the group into classes: The employer was not willing to change his contribution strategy for the health program so we divided the group into two classes, office and warehouse. This allowed me to quote other health carriers for the office class where that was not an option before because the low warehouse participation was putting a strain on meeting carrier requirements.
Step Three – Find appropriate health program: Per the group's request I explored traditional dual option health plans for the office personnel. The warehouse group was offered a rich limited medical policy.
Step Four – Employer contribution strategy: Because the employer was not willing to change his office staff contribution it remained at 50 percent of the low plan for all levels. Because of the low cost of the MiniMed plan I was able to convince the employer to contribute 75 percent of the single rate which left the employee with a monthly premium contribution of $27/month. If you recall this amount is right in the middle of the range that the survey results indicated they could afford.
Results - After all was said and done total enrollment increased almost 43 percent over last year with a little over 75 percent for the office plan and nearly 70 percent for the warehouse group. Satisfaction went through the roof and the employer contribution went up only 10 percent from the prior year.
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