Sharing Cost Savings for opt-out of Medical Ins.

[Guest kseward]

We have a number of employees and/or families that are covered for medical/dental insurance through a spouses coverage. We are thinking about sharing with them the premium savings. (We do no have a cafeteria plan.) Does anyone share these savings with employees and how is the amount calculated.

[QDROphile]

Sharing savings is quite common. And it is done through a cafeteria plan. Amount depends largely on the policies of the employer about the cost it is willing to bear for employee and dependant coverage.

[Sheila K]

At our company, we allocate $3000/year for employees who need medical coverage. If the employee is covered on another plan, they have the option to "opt-out" of the plan. They are then allocated $1710/year which is deposited into a cafeteria plan. These "opt-out" employees have the option of selecting dental and/or vision care, with the premiums taken from the $1710 allocation.

Sheila K

[Guest Susan R]

We offer $1000.00 to full time employees who opt out of our health plan. The payment is made in two installments. We require they show proof of other coverage.

[This message has been edited by Susan R (edited 10-21-98).]

[Guest Nancy Hill]

We have had an opt-out provision since '92. If employee opts out of medical we pay $850 per yr; opt out of dental $125/yr; opt out of optical $50/yr. Amounts are paid June and December. Employee must show proof of other medical coverage (not for dental or optical). Opt-in provision if situation changes pro-rates repayment by employee if opting-in. Our payment is small compared to cost but it does work. Larger share of savings would be more attractive.

[Guest nac]

Wow, we must be really out of touch! We too offer opt-out incentives - $300 per year medical and $48 for dental.

OK, you all can stop laughing now.

[Guest ERead]

My wife's previous employer offered this to us. They paid a prorated amount with each paycheck. Usually came out to be an extra $50 a check. Just a twist on some of the other payment options described above.

[Guest dancass]

For those people who responded above, how effective are the opt-outs, i.e. how many people took it, % of eligibles, savings?

[Guest nac]

Since I'm into my plan renewals just now, I can answer this one for you.

We've got about 30% of eligibles who opt out; that's a pretty static number from one year to the next. Given our laughable opt-out incentive (we're the ones with the $300 per year), that's not too bad.

Because we're self-funded, we estimate plan costs on an aggregated per capita basis. This year it's about $4,100 per capita; assuming that our 1,100 opt-outs would otherwise have signed onto the self-funded company plan, that's $4.5 million saved.

Our plan costs (self-funded and HMO) total about $14 million per year.

[Larry M]

to nac:

my experience has been that employees generally can determine which benefit is worth more - the opt out cash or the reimbursement of medical benefits.

If that were to hold true for your plan, then, if those who had opted out had, instead, stayed in your plan, the average cost would have gone down and the total outlay would have stayed the same or gone down.

The 1,100 persons who opted out would very likely have incurred medical expenses of less than $300 per year on average.

I wonder if you have tracked those who opt out one year and opt in another - do they end up incurring large medical expenses for, say, pregnancy when they return to the medical plan?

[This message has been edited by Larry M (edited 05-27-99).]