Case Study: Level Funding Plus Group GAP Saves Organization $232,841.51

Every year, millions of seniors purchase Medigap plans to fill in “high deductible” holes in Medicare parts A&B. When surveyed, 94% either “like or love” their health plans. Using a similar strategy, you can get similar results – improving available resources for both your organization and its employees.

The key is to combine a competitive “Level Funded” High Deductible Health Plan with a Group Supplemental Health or “Insured HRA” GAP plan. With the right fully insured GAP plan, you can offer seamless supplemental deductible/coinsurance coverage to your employees, similar to how Medigap plans work for seniors. Employees even get to choose their level of deductible protection. To illustrate, we’ve created a case study:

Current: 96 Employee Group on a National Carrier $1000 deductible 80/20% plan with max OOP of $2500/person. Renewal: 13% Increase.

Solution: HDHP Level Funded Plan + Supplemental GAP Plan (Insured HRA).

Results: Level Funded + Insured HRA provides coverage similar to the current plan (Max OOP of $2150 per person) while saving the organization in question $232,841.51 over renewal figures: View Summary

To learn more about these and other HDHP solutions, contact Chelten Consulting.

Improved Communication and Adoption of GAP Coverages Critical to Long-Term HDHP Success

High deductible health plans continue to demonstrate broad appeal even as Congress attempts to pass alternative healthcare legislation. While HDHPs have proven quite effective for some of their insured, many fail to get the specific care they need. High-end health plans that offer more coverage cost dramatically more as services are expanded in every direction. But healthcare isn’t a universal issue with a universal solution.

Surprisingly, both employer and employee adoption of GAP coverages remains low. Some of the most significant voluntary benefits such as critical illness, hospital indemnity, and accident insurance are still not regularly offered alongside HDHPs, creating alarming gaps in coverage – especially for those with health issues that require periodic visits to the doctor and/or pharmacy.

Even when they are offered, employee enrollment rates are modest – a challenge for employer and employee alike. Companies that fail to offer gap coverages and leverage their adaptability as a strong employee benefit will fail to remain competitive in the long term – whether legislation changes or remains as it is today. To learn more about HDHPs, gap coverage, and employee benefits communication, contact us.

What Makes an Attractive Comprehensive Benefits Package?

shutterstock_251707783 smHaving a quality benefits package is a major component to attracting and retaining employees. While you may think your company’s benefits package is competitive, it may be missing certain elements that hurt your ability to hold onto talented personnel. Below are some of the elements that make up a superior benefits package.

Health Insurance

Perhaps the largest and most obvious component, health insurance is among potential employees’ top concerns when it comes to benefits. If your business is small or just starting out, you may lack the funds to include all the bells and whistles with your benefits package. If you have only one benefit to offer, make sure it is health insurance.

Paid Time Off

Paid time off can come in a variety of forms. Many companies offer paid holidays but differ on how they handle vacation, sick leave, personal days, and bereavement leave. To keep things simple, many companies offer Paid Time Off (PTO) policies where the employee can use a day of PTO for any reason. This eliminates the need for doctor’s notes and managing separate banks of days off for vacation, sick leave, and so on.

Supplemental Insurance Plans

Many health insurance plans do not include dental or vision coverage. However, carriers will add them on at a reduced rate should the employer want to offer them. Providing these benefits is appealing to employees. Providing preventative services can be a boon to employers as well. If an employee takes steps to avoid a dental or vision issue or identifies the problem early on, they can avoid taking extra time off work to rectify it.

There are additional elements a business can incorporate into their benefits package to make it appealing. Offering a 401(k) or retirement plan, GAP coverages, and more can help a business bring in and hold on to skilled employees. To learn more about benefits solutions and improving your hiring practices, contact Chelten Consulting.

GAP Insurance Growing in Popularity

shutterstock_174966584 - CopyGroup Supplemental Health (GAP) plans can help fill in the holes of high-deductible health plans (HDHPs). GAP insurance plans do not qualify under the Affordable Care Act (ACA) on their own. However, when combined with an HDHP that is ACA compliant they can help control costs. They are rising in popularity because HDHPs are often too expensive for not enough health coverage.

For example, many ACA compliant insurance plans have high deductibles averaging around $3000. Many individuals do not feel comfortable or are not capable of meeting that cost. Approximately 80% of people qualify for a subsidy under the Affordable Care Act to help mitigate the costs, but that leaves 20% of individuals who have to pay that cost out of pocket. Businesses must also handle these expenses on their own. As a result, businesses either raise deductibles to keep costs down or increase their employees’ out-of-pocket cost.

This is where GAP plans become a major player. GAP plans can provide coverage where HDHPs fall short or help pay deductible costs. GAP plans appeal to businesses in particular because it allows them to offer health insurance packages that ultimately cost less than if they only offered expensive plans with lower deductibles.

GAP plans also allow employees to customize their health insurance to meet their particular needs. Many employees view health insurance customization as a benefit, so GAP plans can help improve employee loyalty as well. To learn more about controlling insurance costs while improving employee health plan satisfaction, contact Chelten Consulting.

HR Objective: Increasing Health Plan Satisfaction

shutterstock_174875483 - CopyOne of the most common and challenging goals for human resources departments is increasing levels of employee satisfaction with health plan options. In a vacuum, this should prove a simple task – but it’s equally important to control costs. One of the best solutions to balance these often-conflicting ideals is to borrow a page from the book of senior healthcare. Seniors obtain GAP coverages that allow them to select which areas they find likely to need additional care. This allows them to obtain relatively little coverage in other, less relevant areas. The strategy reduces the cost of the program while keeping an astounding 94% of senior satisfied with their coverage.

But GAP coverages aren’t exclusively for seniors. Leveraging this model is possible in a wide variety of different organizations and coverage paradigms. The best bet to control employer costs and employee costs is to start with relatively bare plans – bronze or MEC (minimum essential coverage). This helps to reduce excessive coverage for any plan participants. Then participants can elect individual GAP coverages to enhance their plan, making it suit their needs while also improving their understanding/familiarity with it. This can not only help to control costs and increase employee plan satisfaction, but also reduce the burden of benefits communications procedures – especially useful in larger organizations.

To learn more about improving employee plan satisfaction while controlling costs, contact us.

HR Challenges in a Changing World

shutterstock_174966584 - CopyPriorities for employees and prospective talent are shifting. As healthcare costs increase in cost and benefits regulations increase in complexity, more individuals are using employee benefits as a major factor in job selection. Retaining the best and the brightest in your field means offering benefits solutions that are intelligent, adaptive, and cost-effective for both employees and your organization. The one-two punch of affordable bronze ACA-compliant plans in tandem with customizable gap coverages allows employees to opt into the specific services that they deem most important. Additionally, opting in for specific gap solutions means employees are much more likely to understand which coverages they possess and how to use them.

Though remarkably effective, gap coverages are still woefully underutilized in the marketplace. This presents a golden opportunity for employers to set themselves apart. Additionally, this strategy allows HR departments to control costs while offering everyone suitable coverage. It’s the way forward, and those who fail to adapt will fall farther and farther behind. To learn more about gap strategies for your organization, contact Chelten Consulting.

Empty American Savings Accounts Call for Shifts in Healthcare Coverage

shutterstock_92934382 - CopyA recent poll conducted by The Associated Press-NORC Center for Public Affairs Research indicates that approximately two-thirds of Americans would have difficulty covering the costs of an emergency requiring $1,000 in liquid capital. This along with other metrics from the study, strongly suggests that the state of finances for the average American remains painfully precarious.

Financial instability, however, isn’t solely the province of lower-income families. Approximately two-thirds of households earning between $50,000 and $100,000 would struggle with the $1,000 emergency, just 8 percentage points below households making less than $50,000. And the ratio remains above one in three when considering households grossing more than $100,000 a year — a staggeringly high percentage.

Despite the shockingly slim savings, the majority of poll participants indicated that they feel positively about their finances. While this suggests that everyday expenses are well in hand, the vast majority of Americans seem poised for financial crises. Among the most likely culprits of such events are healthcare-related bills. Few Americans carry coverage appropriate to their savings. The underutilization of GAP policies and consumer-driven health plans leave most Americans over-burdened and underprotected.

Regulatory compliance can cause significant challenges for employers attempting to strike a balance between affordability and suitable coverage options, but there are now a wealth of policy alternatives to suit the silent and suffering majority. Contact Chelten Consulting to learn more.


What Is Group “GAP” Insurance?

shutterstock_174966584 - CopyGroup Supplemental Health plans – called “GAP” plans – are used to fill in holes in high deductible health plans (HDHPs) offered to workers today.  They’re similar to the “Medigap” supplemental insurance plans millions of Seniors purchase each year to fill in holes in Medicare parts A&B.

These plans are considered “excepted benefits” under ACA meaning that they operate outside many of the rules of Obamacare.  They are offered only as supplements to existing major medical plans and only cover certain inpatient and outpatient deductibles and coinsurance costs.

Most GAP plans cover neither the professional fees in a doctor’s office nor the costs of outpatient prescription drugs.  Because of this, Advisors generally recommend Employers purchase at least a Bronze major medical plan with doctors office and prescription copays to complement any GAP plan.

“1st Dollar” GAP

This GAP format offers 1st dollar benefits coverage for both inpatient and outpatient deductible and coinsurance costs.  Generally, Advisors design this format to cover up to $6500 inpatient benefits and between $2500 and $4000 of outpatient services.

In order to make 1st dollar GAP affordable, it is almost always age rated, and generally excludes certain services.  Mental illness and substance abuse are generally excluded.

Bottom line:  With 1st dollar GAP, Employees are provided full inpatient benefits.  They can also be covered on most outpatient benefits up to $4000 but are still responsible for remaining outpatient deductibles.  When paired with a Bronze plan, Employers can save money and employees can get 1st  dollar rich benefits they haven’t seen in years.

“Upfront Deductible” GAP

This GAP strategy is based on the HRA model:  Employers buy a high deductible plan (generally Bronze + Doctors OV and RX copay plans) then provide some, but not full deductible and coinsurance GAP coverage.  Example:  Employer provides a $6500 deductible major medical plan  plus $5000 Upfront Deductible GAP.  Employee pays a $1500 deductible then GAP covers the remaining $5000 deductible.

Bottom Line:  Employers save money by using a Bronze plan plus offering several upfront deductible GAP options for employees to pick and purchase. Learn more – contact us.

Message from the Founder: Medigap for Everyone

shutterstock_251707783 smEmployee benefits have changed dramatically in the last 30 years. But at the end of the day, most employers are still looking for the most cost-effective health plan to offer their employees, and most employees are looking to maximize their total compensation without sacrificing too much personal time. Every product and strategy that speaks to issues outside of this unifying principle is likely to be little more than promotional material by outside vendors to HR directors.

It may sound harsh, but the explosive growth in voluntary benefits over the last few decades has largely missed the mark for most employees. If an employee can have a health plan with no deductible or coinsurance, then the sale of critical illness, cancer or accidental injury is probably not that important. Instead, selling short-term and long-term disability plans on a group basis is more cost-effective and consumes less HR and employee time to implement.

As such, I believe that employers should investigate the strategy that millions of seniors leverage every year to fill the holes in Medicare parts A and B – Medigap insurance. They “pick and purchase” the amount of deductible and coinsurance coverage they feel appropriate. When they go to see a medical provider, they simply show their Medicare card and their Medigap card. Everything is done behind the scenes and some of the plans are even designed so that virtually all costs except prescription co-pays are covered by the combination of Medicare parts A and B and Medigap.

So if 94% of surveyed American seniors love their health plan combination program, why are we not offering similar plans to our employees?

Obamacare “bronze” plans are very similar to Medicare parts A and B, leaving employees with sizable deductible and coinsurance costs but providing catastrophic coverage. Group gap insurance plans can be designed to cover a little or a lot of deductible and coinsurance costs, making the plan very similar to the strategy that work so well for seniors.

The challenge lies in voluntary worksite insurance carriers wielding significant influence with agents, HR personnel, and employees. Their persistent support of the benefits of buying cancer insurance, critical illness insurance, and accidental injury insurance drives commissions for agents and bolsters profits for agencies. But the plans are rarely used in comparison to group medical gap plans, and do little to provide tangible benefits to most employees.

Until there’s complete transparency on the part of the medical industry, facilitating fair prices for medical products and services, our best bet to protect employees in a cost-effective and customizable manner is through gap insurance.