An Employee Benefit Strategy For Offsetting Rising Healthcare Costs

Health insurance premiums increased for nine out of 10 employers last year, and 23% saw double-digit increases, according to Gallagher & Co.’s 2015 Benefits Strategy and Benchmarking survey.

For an employer to control their bottom line while premium costs continue to rise, they have one of two choices.

1. Contribute less money to employee premiums, or 
2. Shift employees to high deductible health plans (HDHPs)

In both scenarios, employees are shouldering more of the burden of their rising healthcare costs next year. And when employees are hit with more medical related expenses, the impact can be tragic.

According to the 2014 Aflac Work Forces Report: 

• 49% of employees say they have less than $1,000 on-hand to cover out-of-pocket expenses
• 53% would borrow from their 401(k)s and/or use a credit card to cover the costs
• 13% have been contacted by a collection agency about outstanding medical bills.

To offset the pain employees will feel, John Neumaier, executive vice president at Gallagher Benefits Services, discusses “soft” benefits in a recent EBN article. In it, Neumaier recommends offering a comprehensive strategic benefits plan, including generous leave, flexible work schedules, and ancillary benefits, such as wellness programs. 

A High Usage Telemedicine Plan

Unfortunately, while these “soft” benefits can make the work experience better, it does little to weaken the blow of higher out-of-pocket costs for employees.

One of the few benefits that can truly make a dent in an employee’s medical costs is a high usage telemedicine (HUT) plan. But buyer beware––in order for a telemedicine benefit to be effective, it must include the following:

• A history of utilization above 30%
• No co-pay or fees to use the service
• A savings guarantee

Changing behavior is hard. Talking to a doctor over the phone is a new approach to medicine some people have a hard time getting used to. If telemedicine is bundled with a major medical policy, there will be a co-pay, and the fee difference could apply to the patient’s deductible. Putting any kind of barrier, like a payment, between the patient and the service prevents patients from trying it. Telemedicine solutions that have this payment structure typically have utilization rates well below 5%.

But when employers implement a High Utilization Telemedicine plan, everyone benefits. 

Apart from your annual physical, or a visit with a specialist, most in-person physician visits can be handled over the phone. According to the American Medical Association, 60 to 70% of doctor office visits and 40 to 65% of ER visits could be handled by telemedicine.

A trip to an urgent care center or ER can cost hundreds or even thousands of dollars. Telemedicine can diagnose and treat many common ailments in less than 10 minutes, from the comfort of the patient’s home, saving both the employee and the employer thousands of dollars.

Telemedicine is the future -- 80% of large employers will offer a telemedicine benefit by 2018, according to the Towers Watson 2015 Healthcare Benefit Survey. It is my prediction that 80% of people will speak to a doctor over the phone prior to seeing one in person for non-emergency medical issues within the next five to 10 years––and your strategic benefits plan needs to accomodate that.

Like Amazon for books and Uber for on-demand transportation, telemedicine is helping make healthcare more patient-centric. Make sure your strategic benefits plan stacks up and includes a high utilization telemedicine plan to offset rising healthcare costs.