Benefit Integration: Do Your Benefits Complement or Compete?

Employee benefit integration is taking a step back and looking at the whole picture. Do you know how all of your benefits work together? Think of your employee benefits package as a house. Although each part of the house (window, door, stairs, etc.) is an individual piece, they are all required to create the entire structure. If you only examine the parts without considering the whole – for example: workmanship of the walls and floors, but not the roof – then no one should be surprised when the roof caves in.

Here are examples of benefit integration at work:

• A large school district in Wisconsin had been working with a local health insurance broker for years. The broker’s main focus was the district’s medical and dental insurance; the rest was considered ancillary. What the district and the broker did not know is that the district had ‘double coverage’ – they had a benefit in their health plan that was the same exact benefit in their disability plan. This was pointed out by a new consultant and saved the district $57,000 a year.
• A community mental health authority in Michigan was paying a per person administrative fee on their Flexible Spending Account (FSA). The new consultant took a look and was able to place a new FSA carrier who had no administrative fees. Additionally, the new carrier was able to put some new voluntary products in place that helped employees round out risk when choosing the new high deductible plan they just introduced the year prior. Adoption of the high deductible plan was higher with these new voluntary options in place.
• In another school district in Michigan, consultants separated the Rx portion of their health plan, converted it to a self-funded plan, and placed it with a pharmacy benefit manager to administer the plan. This simple act saved $60,000 for this small district in the first year.

Ancillary Coverage is not Ancillary

Your ancillary lines of coverage are not really ancillary benefits. They work together to complement each other. Each benefit impacts the medical plan as well as the entire benefits program as a whole. Connecting typically stand-alone benefits – medical, Rx, worksite benefits, dental, vision, and disability – can reduce costs and improve health outcomes. These benefits also impact how medical pricing relates to contract negotiations, how retiree benefits drive OPEB balances, and how employer contributions affect cash flow.

Having your broker examine the structure (plan design) of all your policies can help highlight potential savings and coverage gaps. Here are some areas to consider:

• It’s helpful to think of scenarios. For example, if your employee becomes disabled and goes out on disability, what is his/her option for continuing on your health insurance coverage? You might be surprised to find out that you may have more than one option available and that one may be more cost-saving than the other.

• Do you offer retiree benefits to your employees? It could save you money and time to implement a fully-funded Health Reimbursement Arrangement (HRA) instead of an Health Savings Account (HSA) with your medical plan. Why? Because the HSA cannot be used for health insurance premiums prior to age 65. With the HRA, early retirees can convert their HRA to a Retiree HRA for use in post-employment.

• Does your dental plan incent employees to get regular cleanings? There is a synergy between your dental and medical plan. A dental visit provides preventative care, helping employees detect disease early or prevent certain disease. Early detection can help employees avoid more severe health problems and significant medical expenses, which in turn, may also help lower claim’s risk on your health insurance plan.

• Often health plans include a vision benefit as well. How does this compare to your vision plan? Are they both offering some of the same benefits? If so, you may be paying twice for the same benefits.

An integrated approach to benefit integration will help you to reduce costs and improve health outcomes. The goal is to make sure that your policies all complement each other and not compete with each other. For a complete, integrated review of all your benefits, feel free to contact one of our Benefits Consultants.