©2006 Proctor & Company
Saving healthcare premium dollars may be easier than you think
Rosalyn S. Seale, RHU
Executive Vice President

Our client, Dare Family Services, a non-profit social service agency based in Somerville, MA, was faced with a dilemma. Like most non-profits, it needed to deal with the rising cost of medical insurance, while doing everything possible to avoid passing along cost increases to its employees, including raising the deductibles.

Dare’s group medical plan had no inpatient or day surgery co-payments. Although the employer knew there would be premium dollar savings by switching to a plan that included these co-payments, they were concerned the employees might perceive this as having something taken away. Since salaries for non-profit organizations are traditionally lower than the private sector, they felt that offering the very best benefits to their employees was extremely important.

Recognizing these concerns, we recommended that they move to a plan with $150 day surgery and $250 inpatient co-payments, which the employer would pick up for the employees. Out of pocket costs would be capped at a maximum of $1,000 for an individual employee and $2,000 for a family. The total cost savings to the group for this plan was approximately $47,000.

Statistically, 67% of an average employee group will incur claims under $999 in a given plan year. The chances of the employer having to pay out anywhere near the estimated $47,000 savings would be minimal.

To ease the administration of the reimbursement, employees submit any claims incurred for day surgery and inpatient stays directly to the third party administrator. The reimbursements are not considered taxable to the employee since this is a qualified plan.

Annualized claims for the plan year were approximately $8,100. This worked out to be a win/win situation. The employer saved substantial premium dollars and the employees did not have to pay any additional money out of pocket for claims.
Each time we have made this recommendation, the premium savings far exceed the actual cost of the claims.

If you would like us to analyze your situation to see if it can work as well for your organization and its employees, please contact us.