Consumption Plans That Work

As I write this article I imagine a think tank environment somewhere in Washington with some completely dissociated genius who will advise our lawmakers on the next silver bullet for healthcare…

We on the other hand, the folks on the street, trying to assist our clients in navigating the minefield known as employee benefits see it a bit differently.

Our focus for the past 4 years has been bringing the best buying strategies from the self insured environment to the smaller to middle market client.  What the best benefit buyers seem to consistently reach for is two common ingredients…

1. Buy Wholesale (in network usage)
2. Pay as you go.

This allows for employers to only pay for services that are actually used and in the same breath, pay at the discounted pre-negotiated rates.

We discovered however this did not take a critical component into account which prevented the middle market from enjoying the benefit of this strategy. (cost savings)

The end user’s mindset… aka the employee.

This, critical component, when not addressed led to many problematic issues.

1. Entitlement (take care of me)
2. Spendthrift (no downside for irresponsible expenses)
3. Lack of awareness (How does this plan work?)

The purpose of this article is not to highlight the psychology of employees however, without considering their impact the employer has no shot of navigating the healthcare minefield.

HRA’s, HSA’s FSA’s, bolted onto a CDHP…My god what are these things???

When consultants push back possibly due to revenue reduction the end user never understood or saw the tremendous upside of this approach.

Lets paint a very simplistic picture.

Imagine the current benefit package being offered was illustratively a bottle of Poland spring water.
This, a one size fits all solution provides every employee with a full bottle regardless of their thirst (benefit usage) or need. (traditional fully insured program)

We alternatively suggest providing the exact same bottle however without the water, unless needed…
(HRA with a Consumer Driven Health Plan or high deductible)

The employee has the same “water” allowance as in the previous scenario however only if used.

By setting it up this way 2 big things happen.

1st the employee enjoys a first dollar benefits via the HRA.

2nd the employer saves significant “water” as all insured’s don’t drink…

This approach when properly deployed has the effect of getting all employees on the same page as the employer  in wanting an efficient outcome with the health plan…

Through this explanation we’ve successfully brought numerous clients to what little is left of the promised land!

We encourage questions and appreciate being allowed to be part of your advisory circle…

Best,

Bruce Weinstein

P R I N C I P A L  IPA / INSURANCE PLANNING ASSOCIATES

6800 Jericho Tpke ~ Suite 118W   Syosset, NY 11791  Phone: 516-937-7777

Fax: 516-937-7778

E Fax: 516-977-7474  bw@ipa1.com

About The Author

Bruce Weinstein

Bruce Weinstein is Founder and Principal of Insurance Planning Associates.

IPA is a regional corporate benefit-consulting firm that specializes in CDHP / Consumer Driven Health Plans.

For many years IPA has successfully helped clients stay well below runaway trend increases. As early CDHP adopters we have the experience and understanding to assist employers and employees get on the same page with a common goal…

Keep costs down and improve benefits.

Bruce resides with his 3 children Lexie, Max and Jared in Bellmore Long Island.

He is an active member in many charitable organizations. He is an Associate board member of Parker Jewish Institute for Health Care and Rehabilitation.  He is a supporter of The South Shore YMYWHA.  For leisure Bruce is very active with his 3 children in their numerous passions including cub scouts, soccer, basketball, local theater groups, singing and religious studies.

Bruce is an avid Skier, Mountain Biker and music enthusiast.  He has also been with the BMW Car Club of America for over 20 years as a club racer and auto enthusiast.

He can be contacted at (516) 937-7777