Designing the Right
Health Benefit Plan
Chapter 30
Employee Benefit & Retirement Planning
Important Considerations
• Health care plans are an important employee benefit
• Health care plan design is dynamic, rising costs and
an aging workforce create significant challenges for
employers
• Thoughtful design of health benefit plans is essential
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Designing the Right
Health Benefit Plan
Chapter 30
Employee Benefit & Retirement Planning
1. What health benefits do employees want?
– Ask employees about their needs
– Typically, young employees want to maximize benefits for
childbirth and pediatric care, while older employees want
adequate coverage for major medical expenses
– Cafeteria plans and flexible spending accounts are major
tools in effective health benefit design
Copyright 2009, The National Underwriter Company
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Designing the Right
Health Benefit Plan
Chapter 30
Employee Benefit & Retirement Planning
2. Plan design features
– Three vital aspects:
1) efficient delivery of the benefits
2) meeting employer cost constraints
3) positive employee perception of plan
– Plan design offers opportunity for cost control;
managed care plans put more cost control in
hands of employer than traditional postpaid
health care plans
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Designing the Right
Health Benefit Plan
Chapter 30
Employee Benefit & Retirement Planning
Managed Health Care Tools and Techniques
• Prospective pricing
• Peer review
• Negotiated discounts
• Utilization review
• Channeling
• Quality review
• Bundling of services
• Cost sharing
• Capitation payment
• Lifestyle management
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Designing the Right
Health Benefit Plan
Chapter 30
Employee Benefit & Retirement Planning
“Defined Contribution” Health Plans
• Shift payment and selection from employers to
employees
Health Savings Account (HSA)
– employee covered under high deductible health insurance
contract
– employee contributes to IRA-like account to pay medical
expenses
– HSA contributions are limited
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Designing the Right
Health Benefit Plan
Chapter 30
Employee Benefit & Retirement Planning
3. Health benefits for executives
– Current laws allow employer to provide health benefits for
selected executives that are more than or different from
those provided for employees in general
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Designing the Right
Health Benefit Plan
Chapter 30
Employee Benefit & Retirement Planning
4. The process of design and maintenance
Components of design and maintenance:
–
plan design
–
communication with employees
–
financing the plan
–
claims administration and payment
–
periodic plan review and update
–
compliance with federal and state regulatory agencies
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Designing the Right
Health Benefit Plan
Chapter 30
Employee Benefit & Retirement Planning
4. The process of design and maintenance (cont’d)
Responsibility for plan components can be split in various
ways:
–
employer does all
–
employer delegates some or all
–
recently, specialized organizations have developed that
out specific responsibilities
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carry
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Designing the Right
Health Benefit Plan
Chapter 30
Employee Benefit & Retirement Planning
True or False?
1. A “one size fits all” type of health plan is generally
cheaper and is accepted by employees just as well
as a health plan that tries to consider individual
characteristics.
2. Health plans can be used in cafeteria plans, but not
in flexible spending accounts.
3. Traditional health care plans are postpaid plans.
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Designing the Right
Health Benefit Plan
Chapter 30
Employee Benefit & Retirement Planning
True or False?
4. Prospective pricing means the employer negotiates
price of health care services before the services are
needed.
5. The purpose of cost sharing is to encourage
employees to limit health care spending.
6. A “defined contribution” health plan places all burden
of payment on the employer.
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