Medical programs are continually evolving in an attempt to reign in costs. Add in HRAs, FSAs, HSAs, and a host of other acronyms that are hard to keep straight, and it becomes very confusing very quickly. Let us show you how these programs can work for you and your employees:
Health Maintenance Organizations (HMOs):
HMOs are networks of medical care providers which consist of Primary Care Providers (PCPs), Specialists, Hospitals and Ancillary Providers. Coverage is limited to these In-Network providers except in a true emergency. The key features of an HMO are:
They emphasize preventive care via annual physicals;
Payment is typically an Office Visit or Hospital Stay Co-payment;
The PCP coordinates the treatment needs and access to Specialists Referrals), for Surgery & Hospitalization (Pre-certification) and any Medical Tests (Pre-authorization).
An HMO plan is generally the least expensive approach as the patient has the lowest level of freedom with provider care selection.
POS plans include an HMO for in-network coverage but also allow insured to go out-of-network and visit the provider of their choice. Benefits while using the HMO will be higher than using an out-of-network provider. Out-of-network services are typically reimbursed at a specific coinsurance level (usually 70% to 80%) after satisfying a deductible. The key features of a POS plan are:
Access to HMO services is subject to co-payments while the coordination of the insured’s care is directed by the Primary Care Provider;
Freedom to see providers outside of the HMO network with the reimbursement of medical expenses subject to deductibles and coinsurance;
Pre-certification and Pre-authorization of Out-of-Network care is the responsibility of the insured member. This greater freedom of care access is accompanied by greater levels of notification responsibilities.
As part of the medical fees are generated by the utilization of Out-of-Network providers, the cost for POS plans is generally more expensive than HMO coverage.
Preferred Provider Organization (PPO):
PPOs consist of a network of health care providers that an insured member has complete access to without referrals. PPO networks are typically significantly larger than HMO networks and provides insureds with a much greater choice of providers. An insured member also has access to providers outside the PPO network. The key features of a PPO are:
In-Network services are subject to co-payments, deductibles and/or coinsurance cost sharing features;
Out-of-Network services are usually subject to higher deductibles and lower coinsurance reimbursement level;
PPO’s may be national in size and scope.
PPO plans provide your employees with the greatest freedom of provider choice and therefore are the most expensive Managed Care product.
Prescription Drug Coverage (Rx):
Twenty-five years ago, coverage for prescriptions was covered under an employee’s major medical coverage. Prescriptions were subject to coinsurance reimbursement after satisfying a deductible. Rx coverage is now generally covered under a Managed Care plan. The key elements of an Rx benefit are:
Prescriptions are purchased subject to co-payments. Some plans include a deductible corridor;
Drug Cards can offer different copays for generic, preferred brand name and non-preferred brand named drugs;
Prescription Mail Order Programs provide a 90 day supply of maintenance drugs at lower total cost to the insured.
Prescription drug claim usage and costs have escalated at a higher inflationary level than most other forms of medical care.
Dual Choice Approach:
Many employers provide all of their employees with one type of plan.
Employees are diverse in skills, personalities and their insurance needs. Dual Choice plans create an opportunity to best meet the needs of your employees while lowering overall costs. The key elements of a Dual Choice plan are:
Younger and/or healthier employees may prefer a lower costing HMO
Other employees may still wish greater freedoms of provider choices and are willing to contribute higher payroll deductions for that option
Employee contribution levels can be set to create “steerage” to the lower costing HMO plan
Providing employees with a choice of programs can save the employer money while empowering the employees. Dual choice plans can be set up via a specific class of employee or through open enrollment.
Consumer Driven Healthcare:
CDH plans have recently entered the market as a means of controlling employer medical insurance costs. CDH plans make use of Health Savings Accounts (HSA) with a high deductible PPO plan. The key elements of a CDH plan are:
The employer and/or employee may contribute funds into an HSA. The HSA belongs to the employee at all times.
Withdrawals from the HSA are used to pay for medical services.
CDH plans encourage employees into making more cost efficient care decisions. This lowers the employer's insurance cost while providing a reasonable level of coverage for more severe medical care treatment.
The greatest challenge of implementing CDH plans is the complexity of the product and willingness of employers to contribute into an employee's HSA.
Most medical plans are written on a fully insured basis whereby employers are “pooled” together with other companies of similar size in the same regional area. Rate increases are geared towards the overall claim experience of that pool of employers. Employers with healthy employees and low claim usage will offset costs for other pool employers with severe medical costs. An alternative to this approach is self-insurance or an Administrative Services Only (ASO) contract.
ASO contracts allow companies to save money in years when they have lower than expected claims. Conversely, in bad years they are protected by stop loss insurance if claims exceed expected levels.
The key elements of an ASO plan are:
• An employer will only pay for the claims that are incurred by their own company.
• Employer has complete flexibility to design their own benefits program and may eliminate expensive state madated benefits that are not needed by your employees
• ASO accounts are generally written with Individual Stop Loss insurance that would protect a company from a catastrophic claim in excess of a specific amount for an individual.
• ASO accounts are also written with Aggregate Stop Loss coverage that would protect a company for total claims in excess of a specific amount.
Do you need to provide benefits for Expatriate, Third Country Nationals or Inpatriate (from the U.S. perspective) employees? We work with a wide variety of providers from around the globe to provide programs that will give your employees and their dependents piece of mind knowing that no matter what comes up they will get the services and support they need 24/7 anywhere in the world.
Talk to us about your company's specific needs in the international community.