Employee 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.