A manufacturing company that was soon to become one of our clients provided group medical benefits to its 35 employees through a low-deductible PPO plan. When the plan came up for renewal, the carrier imposed a large rate increase. The company asked its agent to shop around for alternatives, but at the 11th hour they were told that they had no other viable options but to accept the rate increase as proposed. The company’s management then called us for help.
With no time to find alternative coverage and complete the enrollment and underwriting process by the renewal date, G&A Partners’ benefits experts focused instead on changing the plan design with the existing carrier. They offered several plans with higher co-pays and deductibles, lower co-insurance percentages, and lower monthly premiums. Management had initially looked at these options but had dismissed them because they wanted to provide a higher end plan to their sales and administrative staff. We then presented the idea of a dual choice plan with the same carrier.
In this scenario, the client could offer both a basic and an enhanced medical plan. The basic plan featured a higher doctor office co-pay, a higher deductible, and a lower co-insurance percentage for hospital and outpatient care. The enhanced plan featured the same co-pay, deductible, and co-insurance percentages as their present plan. The prescription drug card was the same under both the basic and enhanced plans. The company would contribute 100 percent toward the cost of the employee-only premium for the basic plan. Employees could purchase the enhanced plan at their own expense.
This change in plan design allowed the company to save over $30,000, annually. Most of the employees, especially those on the shop floor, opted for basic coverage at a lower expense to both the company and to those employees electing dependent coverage. Employees opting for the basic coverage still had convenient co-pay arrangements for doctor office visits and prescription drugs, and comprehensive coverage, albeit with a higher deductible and lower co-insurance for illness or injury requiring hospitalization or outpatient treatment. For those who wanted to continue using what would now be labeled the “enhanced plan,” they could do so at a reasonable personal expense. It was a “win-win” for everyone except the broker, who failed to think outside the box.