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
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.