Is there ever a perfect solution? Probably not in a realistic world where employers want to keep costs contained, and employees want unlimited benefits. There are ways of managing your company’s exposure, yet ensuring quality benefits are available for employees that require them. You will want to ensure that you don’t have an exposed benefit plan.
The following is a quiz to see how exposed your company plan is to cost increases, abuse and fraud. So do you have an exposed benefit plan?
Exposed Benefit Plan? Take The Quiz
1) Your benefit plan is in the following funding model:
a)Health Spending Account only (0 points)
b)Insured drug and HSA dental, paramedical (2 points)
c)ASO only with stop-loss (3 points)
d)Insured only (4 points)
2) Your drug plan is set up accordingly:
a) Tiered Formulary using a Central Dispensing Formulary (0 points)
b) Generic Plan Only (2 points)
c) Combination brand and generic drugs (4 points)
d) Open Formulary (10 points)
3) Your dental plan is set up accordingly:
a) No dental plan (0 points)
b) Dental plan is covered under an HSA component (1 point)
c) Preventative and restorative only (2 points)
d) Part C + major dental with co-pays and maximums (3 points)
e) Part D + orthodontics with co-pays and maximums (4 points)
f) Part E without co-pays and maximums (8 points)
4) Your paramedical coverage (physio, chiro, massage etc.) is as follows:
a) No paramedical coverage (0 points)
b) Paramedical coverage as part of an HSA model (1 point)
c) Paramedical coverage with a co-pay of $20+/ visit ( 2 points)
d) Paramedical coverage with a maximum family allowance for combined practitioners (3 points)
e) No restriction of paramedical coverage (7 points)
f) Massage therapy included but requires a physician’s note (minus 2 points)
g) Only required to submit practitioner invoice when audited by claim payment company (Add 2 points)
5) The following health components are covered by catastrophic insurance: Accidental Dental, Private Home Nursing, Emergency Ambulance, Semi-private room coverage
a) Yes covered by insurance (0 points)
b) No, pay as you go for these components (3 points)
6) Your Employee LTD has a Disability Management Component included with coverage
a) We don’t have LTD coverage (0 points)
b) Yes, Disability Management is available to employees and employers after 5 consecutive days of an employees’ absence (1 point)
c) No Disability Management (5 points)
7) You have ceiling caps and limits on dental, paramedical and drug benefits
a) All of the above (0 points)
b) One or two of the above (3 points)
c) None of the above (10 points)
8) We buy our group plan through the following:
a) Directly with an Insurance carrier via a broker (3 points)
b) Through an independent Third Party Administrator (TPA) via a broker (1 point)
9) How often do you review your benefit plan costs, reports and trends?
a) Every 3-6 months (0 points)
b) Only at renewal time (3 points)
c) Never (5 points)
10)Employees are required to attend regular benefit education sessions with an emphasis on cost containment strategies how often?
a) Approximately every 6 months or less (0 points)
b) Usually every year or two (2 points)
c) Only when the company is changing the benefit plan (3 points)
d) Our employees don’t usually want to talk about benefits unless they need help submitting a claim (5 points)
So Do You Have an Exposed Benefit Plan? How Did You Score?
If you had a score of fewer than 10 points, you have either very few benefit components, or you’re very well protected from large fluctuations in your annual benefit plan costs. You may want to engage your employees to see how satisfied they are with your plan.
Generally speaking, you’re better off than most companies. If your employees have a high approval rating of your plan, then you’ve fallen into a pretty exclusive category. You may want to investigate some areas where you’ve scored higher and see what you might be able to do to remove unnecessary exposure.
Your plan is pretty vulnerable. If you haven’t experienced double-digit increases every year, you can feel fortunate that you’ve got employees who are honest and don’t make a lot of claims. You definitely want to remove some of your plan’s exposure.
You better cover up because you’re sitting pretty naked and winter’s on the way. Chances are your employees probably love your plan, but you’re vulnerable to large increases every year. There are some easy fixes to maintain your company’s cost structure without compromising your employee’s ability to access benefits.
Chris Coulter is the Founder and President of The Finish Line Group. He works with business owners to leverage their businesses to increase their wealth, reduce corporate and personal taxes, create viable succession strategies, enable employee retention strategies and allow them to exit their businesses on their terms.
Chris’ passion for what he does evolve from the mistakes he made in his first business; by not diversifying his risk and not utilizing a lot of the opportunities within his business to create significant wealth. Chris found out the difficult way and now educates business owners on how to avoid many of his former oversights and ultimately control where their finish line ends.