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Educated Choice

By: Cathy Aguirre

How to control health care costs continues to dominate discussions among benefit administrators, chief financial
officers, CEOs, insurance brokers and health benefit companies. When you lower your costs, your employees often react by thinking they will receive fewer benefits.

Offering a choice of plans, having a sensible contribution strategy and providing employee education can hold costs down and satisfy employees.

Choice, choice, choice
Offering a choice in benefit plans, choice in network access and choice in monthly costs are some of the best ways to keep health care costs affordable. Whether you have 20 employees or 1,000, find a health benefits company that can offer you several plans for employees to choose from.

Typically, employers offer very little choice in health benefit plans. Successful benefit administrators understand that every employee has unique health care needs. Why not offer employees three or four plans to choose from?

The level of benefits employees choose will relate directly to how much they utilize health care services and what they can afford.

Most health benefit companies offer the following types of plans.

Traditional HMO
Lowest-cost plan, all care is coordinated by a primary care physician; employee must stay in network

Open access
A slightly higher-priced plan allowing the employee the freedom to selfrefer to specialists in the network. More freedom equals a higher cost.

Point of Service (POS)
A less affordable plan for most, with more freedom; employee can access HMO benefits/network and/or pay higher co-insurance and choose any doctor

Preferred Provider Organization plan (PPO)
Greatest freedom, highest cost; total network access and out-of-network benefit, self-refer to specialist

Developing a contribution strategy
Now that you have decided to partner with a carrier that can offer your employees the choices they need, how do you stay within your company's budget? The answer is simple - be fair and consistent by implementing a defined contribution strategy that fits your company's budget. This process can be accomplished in two easy steps.

1. Determine what dollar amount per employee your business can afford.

2. Select a carrier that can offer you four plans that will satisfy your employees' health care needs.

Here's an example of how a defined contributions strategy could work for you (based on a health benefits budget of $180 per employee, per month).

In the example in the chart above, your company accomplished two very important goals: You controlled your company's costs
and you offered your employees choices.

With a defined contributions strategy, your employees are responsible for evaluating what they need and how much they are willing to pay.

A choice of plans with a defined contribution strategy is two-thirds of the employer's cost saving equation. By adding employee education, you could see a change in behavior that can lead to significant savings. The more informed employees are about the true cost of health care and how their choices directly affect their pocketbook, the more likely they are to become "partners" in controlling costs.

Most health benefit carriers provide members with an Explanation of Benefits for all claims processed, which contains the cost of services. Web-based tools offer plan information and are user-friendly. At workshops and mandatory open enrollment educational meetings, employees can speak directly with a carrier representative.

As health insurance premiums continue to rise and more employers face very difficult decisions, offering a choice of plans can keep your employees happy and satisfy your bottom line.

Author Bio
CATHY AGUIRRE, vice president of account services for VISTA, has more than 18 years of experience in managed care marketing. Aguirre provides leadership for all of VISTA's commercial accounts, which include Broward County government, The School Board of Broward County, Broward Sheriff's Office, Miami-Dade Government, Sears, Walgreen's and United Airlines. Reach her at (954) 965-3471 or

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