By Paul Parisi, Head of Employee Benefits at Atrium HR Consulting.

It’s always exciting in the ever-evolving arena of Employee Benefits! Sometimes it seems like our world never stands still, and what were considered to be pioneering changes and trends a short time ago, have now given way to even more innovative solutions.

Take, for example, the current upward drift of premium rates in a post-COVID world. With costs to corporate clients on the rise due to sky-high usage, consultants like Atrium have been crafting solutions that incorporate co-insurances and deductibles into plans now more than ever.

Previously, it was the norm for group medical plans to cover all treatment in full, with the insurer reimbursing members 100% of the costs they incurred (subject to annual limits). However, in many cases, members made the most of this generosity, sometimes even deliberately seeking treatment at the most expensive facilities they could find, simply because they could. In other instances, members woke up with minor colds, or other slight ailments, and immediately rushed to the doctor, again, simply because this was fully covered, and they had no “skin in the game.”

These actions are sustainable for only the briefest period of time – a single policy year. At renewal, HR are then initially left at a loss as to how to negotiate when an insurer has proposed a 50% increase in rates. Do we chase premium by switching to a cheaper provider, often one of less global renown? Do we cut benefits and suddenly tell members their maternity or dental costs, for example, will no longer be included in the scope of coverage? Well, while these are certainly both ways that would trim costs, such actions also leave members without vital coverage upon which they may have previously come to rely. And, so, methods have been developed that maintain benefits while still working within existing budgets.

An initial solution was to attempt to impose a co-pay of a flat USD rate per visit, say USD25. For example, if a member visited a doctor’s office and the total bill came to USD200, the member would pay their USD25 co-pay and the insurer would cover the remaining USD175. As expected, this led to a curb on members rushing to the doctor upon the slightest trace of illness. They were more likely to wait a day or two, resting and drinking hot tea, before visiting their doctor. However, and perhaps unsurprisingly, this proposed solution had little effect on members selecting the most prestigious – and, thus, the priciest – facilities. In other words, when they did ultimately go to the doctor, they went to an expensive one.

The latest solution is to adjust that flat co-pay model to one that applies a proportional member contribution, for example, 20%. In this new scenario, if a member were to visit a doctor’s office and the total bill came to USD200, the member would be responsible for USD40 and the insurer would cover the remaining USD160. Now, members are not only thinking twice about the bona fide medical necessity of every visit, but they are (hopefully) shopping around to find competitive options when they do seek medical treatment.

This is just one way consultants like Atrium are helping corporate clients contain costs in challenging times, while still ensuring members retain access to vital care. As the world of EB continues to progress, we anticipate having to craft similarly creative solutions to address the myriad of unspecified concerns that may arise in the future.

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