With 2018 well underway, and employers continuing their pursuit of controlling long-term costs, here are some of the latest trends we’ve been discussing (and implementing) with many of our group benefit clients.
The Gap: What’s Old is New Again
Two generations ago, the GAP was a favorite clothing store! Now, the GAP is back, only this time, it’s one of the more unique ways to lower premiums while reducing your out of pocket costs.
GAP plans, which come in a variety of flavors, help employees pay for their deductibles and coinsurance should someone incur a major claim. Unlike traditional accident plans, which are becoming more and more popular as well, GAP plans cover both sickness and accident, and can be especially tailored to tie nicely into a high deductible plan.
For instance, say you have a $1,000 deductible now, and you’re looking to offset your renewal increase. You could move to a $2,500, and then either pay for (or offer on a voluntary basis) a $1,500 GAP plan that would pick up the difference. In almost every case, the total premium between your $2,500 deductible plan, coupled with a $1,500 GAP, comes out less than the premium on the $1,000 deductible plan just on its own.
So this way, you have lowered your premium cost, while at the same time reduced your out-of-pocket maximum as well.
GAP plans can also be tied to HSA plans. In this case, due to HSA ‘first dollar’ rules, your GAP plan would come with an upfront deductible, usually $1,300 for singles and $2,600 for families, with the GAP plan then paying amounts above and beyond that, depending upon the benefit you choose.
Best yet, GAP plans are usually guaranteed issue with NO pre-existing condition clauses, and typically require no more than five subscribers to start.
As carriers look for deeper provider discounts to control costs and premiums, many have created so-called “narrow networks” as a means to achieve both objectives. One example is Blue Cross Blue Shield of Illinois, who has stepped forward even further this year with a concept called “Options” that’s well worth considering.
Blending two networks into one plan, Options allows subscribers the chance to utilize two levels of “in network” benefits. If one uses a regular BXBS PPO provider, you have a specified deductible and coinsurance, and of course, specified doctor visit and prescription co-pays.
However, at any time a member uses one of the providers in the smaller BXBS network (commonly referred to as “Choice”), your deductible is significantly lower as are your doctor copays. The idea is the opportunity to use both networks (Choice is merely a subset of BXBS large PPO network), to lower your out of pocket costs as much as possible.
As for premium differentials, BXBS is pricing their Options plans very competitively, and are not to be overlooked.
And lest we forget, there is also a “narrow” HMO network called Blue Care Direct. A subset of BXBS’ Blue Precision Network, the BCD plans utilize Advocate hospitals and its many doctor groups. This too can be a real game-changer in offering strong HMO benefits at significantly lower costs.
Other carriers like United Healthcare (CORE, CHARTER HMO) and Aetna (Saving Plus) offer similar narrow network arrangements as well.
For groups big and small, even ones under 50 employees where your claims typically don’t factor into your renewal, retiree carve out plans can make sense for groups looking to provide ongoing “group-like” benefits for their over age 65 retirees. This is especially helpful not only for current retirees still on your group medical plan, but moreover for active (over age 65) employees who’d probably like to retire but are wary of Medicare supplements and Part D prescription plans, which are usually not as strong as group prescription benefits.
Typically offered at two or more lives, these carve-outs, like GAP plans, are guaranteed issue with no pre-ex exclusions. Even for small groups, especially those that have chosen to go back to “composite” versus age rates, retiree carve outs allow your group to lower its overall average age and hence reduce the composite rates that go with it.
We hope you find this information insightful and beneficial to your organization’s plans as you continue to grow. Paul Shaheen is Senior Vice President of The Horton Group and has been a member of Horton’s Employee Benefit Solutions team for over 26 years. Paul can be reached at Paul.Shaheen@thehortongroup.com, or at 312-989-1423.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.