Choice Is A Very Good Thing

Since employees are actually the people that pay for the cost of health insurance (through the reduction of wages otherwise received), it stands to reason that they be allowed as much choice as possible when it comes to selecting a benefit plan provided by their employer.

Personally I don't think it is possible to have "too many choices". Unfortunately for small groups (25 to 250 employees) in most cases plan benefit choices are limited to two - sometimes three at the most. Usually there is an HMO, a PPO and now some sort of high deductible or consumer driven plan.

The problem in most cases right now - at least in the 11 states in which I do business - is that the premium differential between these current choices are very minimal. And this means that employees have very little control over their total compensation.

What we need to see is a plan design that has very significant premium differentials and true risk management options. We need more choices so that employees can really generate control over how much of their compensation is taken as taxable wages or tax favored benefits.

Because the small case market has limited options in this regard, we have taken to trying a new approach - with some limited success thus far. Our latest idea is to establish a single "base" plan with the lowest possible premium and significantly reduced benefits. If possible we make this base plan one that qualifies for and HSA (assuming the premium savings will justify it).

For employees that wish to little or nothing in premium share, they now have that option. They can take the extra risk and deal with it as they see fit. Where we have a qualifying plan in place, they may establish an HSA if they wish to do so. Otherwise, they pay for claims from their existing resources as needed.

For those employees that cannot tolerate the risk we offer "gap" coverage. These plans provide benefit coverage to fill in the gaps from the new high deductible or catastrophic comprehensive plans sponsored by the employer. The premiums are pre-tax under Section 125 and in most cases we can eliminate pre-existing condition provisions by meeting participation requirements.

The idea here is pretty simple and straight forward. We want employees to have a real choice in how they each take their compensation and handle risk. This is really no different that what employees must do for their automobile and homeowners coverage. Why not let them do the same with health insurance?

RAM