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rewarding employees for not using their medical benefits


Guest Julie Cardinalli

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Guest Julie Cardinalli

I am interested in ways to reward employees for not using their medical benefits. The utilization is killing the claims experience. There are no major claims over $10,000. The employer is thinking about returning half the medical deductible in cash to the employee if it is not used. Thanks for your help.

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Need some clarification--how would the employer 'return half the deductible if it is not used'? Sounds like employer will pay out an amount equal to half the deductible to employees who don't have claims that exceed the deductible--meaning everyone who has treatment that would otherwise qualify for reimbursement, but the charge amounts don't exceed the deductible, would qualify for a windfall, whether they had zero treatment visits, or were just under the deductible amount.

This convoluted description of the 'cashback' scenario should suggest the complications latent in this tactic.

If, as your post suggests, the plan in question is a self-funded fee-for-service plan, why not simply adjust the deductible level? In terms of producing certain, forecastable use & payouts results, changing deductible levels is the most valuable tactic in the benefits pro's toolkit.

Overutilization is almost never uniformly distributed across health conditions; what's going on with this population? Lots of births (your 'no claims over $10k, coupled with your statement that overutilization is the issue, suggests this)? Disproportionate numbers employees whose total benefits over the year are amounts equal to or lower than their deductibles? Unusual MH/SA claims?

Running a magnifying glass over the claims may enable you to target the problem areas & devise a solution that minimizes pain for all employees while addressing the real needs of specific overutilizing populations.

Any opportunities for setting up standard and premium levels of coverage, with stiff contribution requirements for the premium plan (which would keep your current deductible levels) vs the standard plan (a plan that features--surprise--higher deductibles)

Selling 'bonuses' for not using health benefits is tough--employees usually smell a rat, even tho there may not be one to smell.

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  • 4 weeks later...

You are on the right track. It is the only way to lower costs. Give financial consequence and incentives to employee for health care purchasing. There are many methods. Qualified MSA's are too rigid. Try some form of a non-qualified MSA. Find examples such as Forbes Inc. Our companies have been using these methods for 4 years.

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Be careful how your company "rewards" healthy employees. If the employees contribute towards their coverge and you return a portion of their premium to the healthy ones, you are very likely violating HIPAA - can not charge rates which differ by health status.

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A couple of other things.

If you're self-funded, do you have a PPO in place? If so, is it too rich, incenting overuse? For example, is everything covered under a copay? can you move some services like hospitalization to deductible? If you have deductibles, how about raising them, as well as your out-of-pocket limits? What are your MH/SA limits? do you have any at all? Take a long look at your Rx costs - how are they covered? Do the copays or coinsurance adequately share the cost?

If you don't have a PPO, look into one - you could save a significant amount of $$ with network discounts.

Another approach I've used for incentive to eliminate overutilization is a 401(k) contribution if actual claims experience falls below a target per capita. Exceed the target, no contribution that year.

And finally, you can make a move to fixed costs just by contracting a fully insured plan. Good luck - have fun trying to analyze the leaks in your plan! I've spent 3 years doing it, and they're still not plugged . . .

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